Written by Marty Bell, as originally published in The Reverse Review.

On the Docket
Just prior to breaking for summer recess at the end of July, the U.S. Senate passed the Reverse Mortgage Stabilization Act, H.R. 2167, by unanimous consent, authorizing “the secretary of Housing and Urban Development to establish additional requirements to improve the fiscal safety and soundness of the HECM program.”

NRMLA had been working with HUD to create such legislation to give the department the ability to makes changes via mortgagee letter rather than regulation ever since the auditor’s report on the agency was released last November. Our legislative team, led by NRMLA President Peter Bell and Executive Vice President Steve Irwin and including our lobbyists (Melody Fennel, David Horne and Scott Olson), spent much of the past seven months meeting with members of Congress, their staffs and committee staffs to explain and advocate for the value of legislating the desired authority to HUD.

This authority is reiterated in the FHA Solvency Act of 2013, passed with a 21-1 vote by the Senate Banking Committee on July 31. However, the House of Representatives’ Protecting American Taxpayers and Homeowners Act, sponsored by Financial Services Committee Chair Jeb Hensarling and passed out of the committee on a close 30-27 vote, would eliminate the HECM program after two years.

The Hensarling bill will not gain any traction in the current Senate or with the current administration. So the next steps are the issuance of mortgagee letters by HUD that will address such specific issues as tax and insurance set-asides or escrows, capping upfront draws in some manner and implementing a financial assessment procedure.

NRMLA Attends Bill Signing
In recognition of NRMLA’s support during the legislative process, HUD Secretary Shaun Donovan and FHA Commissioner Carol Galante invited Peter Bell to join them at the White House on August 9 to witness President Barack Obama signing the bill.

Everyone in Washington Seems to Be Talking Retirement Funding
Three separate conferences in Washington in the last week of July and first week of August addressed aspects of the retirement funding gap. With 77 million boomers steadily reaching the retirement benefit eligibility age, and the older sector soon to become the largest sector of the American population for the first time, this wave of discussion is likely to keep building.

A conference sponsored by the think tank Aspen Institute urged lawmakers to tackle tax reform to maintain the current system of workplace retirement plans encouraged by tax benefits. There was widespread support among the speakers, who agreed that the most effective tool to encourage more savings among more Americans is an Automatic IRA. Under such a plan, a set percentage of salary is deducted from every employee’s salary each week and placed in a retirement plan unless the worker chooses to opt out, as opposed to current plans in which a worker must opt in.

At another conference entitled “Rethinking Retirement: Moving Ahead Without Leaving Anyone Behind,” sponsored by AARP and the U.S. Chamber of Commerce, organizations often on the opposite sides of debate on financial issues, a joint statement was offered supporting:

  • Expanded worker access to tax-deferred retirement savings plans while minimizing additional burdens this may impose on employers
  • Enhanced incentives for workers to save for retirement, especially for low- and moderate-income earners who have fewer opportunities and resources
  • Increased education for working Americans to save sufficient funds for retirement

Finally, the 21 research papers presented at the annual Washington conference sponsored by Boston College’s Center for Retirement Research, the University Retirement Research Center and the National Bureau of Economic Research focused on the future of Social Security. But throughout the discussion, titled “Retirement Security in Changing Times,” data and other information that is of value to the sales of reverse mortgages sneaked in.

Among the issues raised that could be addressed by reverse mortgage loans were:

--Many Americans who want to retire are postponing solely due to the burden of their mortgage payments.

--There is a cohort of people over 55 who planned their retirement, were saving, lost their jobs as a result of the recession, cannot find other work and thus are left with a cash gap in their retirement funding plans.

--Some of those in the above situation are finding they are getting lower monthly Social Security benefits than they had anticipated because they had fewer years at their higher salaries than they expected.

--Some people in the situation above lose their health care benefits and cannot replace them and also pay their other monthly expenses. The result can be avoiding going to doctors when necessary.

--Instead of borrowing against their homes, many people are using credit cards with high interest rates to pay their medical bills and thus multiplying the cost of their medical care over time.

--Financial advisors tend to focus on asset accumulation and income replacement, but of equal or even greater value can be debt elimination.

New Music in New Orleans—Registration Now on Open
Join your colleagues amidst the music of New Orleans at NRMLA’s 15th Annual Meeting & Expo, “New Music: Changing the Reverse Mortgage Conversation,” as we explore and adjust to:

--New procedures and requirements that will be implemented by HUD
--New research by leading academics
--New ideas for engaging financial planners and Realtors
--New clients and new products, including proprietary loans
--A brand-new approach to industry-wide advertising and volume growth

(Of course, some things never change—like our networking reception, the single-largest annual gathering of reverse mortgage professionals in one room.)

To register, go to nrmlaonline.org.

NRMLA Welcomes New Members
NRMLA welcomes the following companies that recently joined the association:

Professional Achieves CRMP Status
Galen Call, Treehouse Mortgage Group