HECM Protections Stall On Capitol Hill
AARP has come out with a statement regarding the “Foreclosure Prevention Act of 2008.”
It’s remarkable that AARP — a big power in Washington — has had so little success with reverse mortgage legislation. Provisions to lower reverse mortgage costs and to enhance borrower protections are routinely lost in the legislative process.
As an example, S. 2490: Reverse Mortgage Proceeds Protection Act, was introduced in December by Sen. Claire McCaskill (D-MO). The legislation would “prohibit authorized lenders of home equity conversion mortgages from requiring seniors to purchase an annuity with the proceeds of a reverse mortgage, and to provide other consumer protections to reverse mortgage borrowers.”
Why is it so hard to get such legislation passed? Who is helped — and who is hurt — by the McCaskill proposal?
“AARP,” says the statement issued yesterday by David Sloane, AARP Senior Vice President, “is disappointed the legislation failed to include needed provisions that would help prevent foreclosures. While we appreciate the inclusion of the reverse mortgage provisions of the FHA Modernization Act, we hope this bill is the down payment on a broader overall effort to protect millions of American families from the crashing housing market.
“AARP has been working with Congressional leadership to modernize the Federal Housing Administration and expand access to government-backed reverse mortgages, while limiting the high fees charged. We are grateful for the broad bipartisan support on these provisions that will help older homeowners tap into the equity in their homes in order to pay for necessities like long-term care needs, home repairs, and emergencies.
“However, we are now looking to leaders in the House of Representatives, as well as further efforts in the Senate, to provide help that would allow millions of families prevent foreclosure on their homes. We will work with leaders in both chambers on a broader bipartisan package that will include common sense solutions, like extending bankruptcy protections – already available on yachts and vacation homes – to also include a family’s primary home. These protections are needed to help homeowners remain in their homes while they work out payment schedules.
“Congress showed us earlier this year that it can overcome partisan obstacles to directly help Americans feeling the pressure of the tightening economy. We are hopeful they can come together again to help families stay in their homes and protect their financial security.”