Q&A: Reverse Mortgages Offer Creative Solution to Aging in Place Crisis

Reverse mortgages are a creative, yet critical component to solving the aging in place crisis the U.S. faces not only today, but in the decades to come, says a former Department of Housing and Urban Development (HUD) official and housing-health care policy advocate.

Creating a strategy that links both housing and health care is something the U.S. will be tasked with developing over the coming years, and this needs to be top-of-mind for the 2016 presidential candidates as well, says Henry Cisneros, former HUD secretary and the co-chair of the Bipartisan Policy Center’s Health and Housing Task Force.

“Responding to the needs of an aging population will be one of the most complex public-policy challenges facing our nation in the 21st century,” Cisneros said on the eve of last week’s New Hampshire Housing Summit, an event co-hosted by the BPC and the J. Ronald Terwilliger Foundation for Housing America’s Families.

The event featured several candidates from the 2016 presidential race on both sides of the aisle, including former Governor of Maryland Martin O’Malley (D), New Jersey Governor Chris Christie (R ), Senator Lindsey Graham (R-S.C.), former New York Governor George Pataki (R ) and Senator Rand Paul (R-Ky), among others in the mortgage, banking and housing sectors.

A central theme of the Summit focused on the need to enhance policy and programs that can foster successful aging in place for the 73 million people who will be age 65 or older by 2030—70% of which will eventually require some form of long-term supports and services.

Although RMD was not able to attend this year’s New Hampshire Housing Summit, Henry Cisneros took time out of a busy traveling schedule to chat with RMD via telephone just a couple days after the event to discuss the importance of improving aging in place solutions for aging Americans and how reverse mortgages can effectively carve out their role in the conversation.

RMD: Last week, you attended the New Hampshire Housing Summit, an event co-sponsored by the Bipartisan Policy Center (BPC). The Summit even featured several Presidential candidates. In your opinion, why is it important to have conversations about creating more solutions focused on helping America’s booming senior population age in place, especially at an event like the New Hampshire Summit?

Henry Cisneros: One of the really pressing priorities for our country, in terms of our housing stock, is facing up to the reality that this aging tsunami where we’re going to have double the population over 65 years of age and triple over 85 years of age within the next 30 years. This is going to require a different approach to appropriate housing.

That is to say, the homes in which many seniors live today aren’t appropriate for their aging and they will have to find housing that’s more a appropriate scale for their aging needs. This means housing that has the proper features like zero-step entrances and lower cabinets, bathroom fixtures at the proper height, or security systems that are smart technologies—just all kinds of things that make the house not only comfortable, but safe for aging Americans.

One of the greatest causes of hospitalization and, in many cases the decline toward death, that is associated with older populations is a fall in an unsafe house. This is not an abstraction. This is very real.

That is clearly a priority and it’s not being built without some interventions. There are some in the private sector beginning to address it, but I think it’s important to get a broader scale, which will probably involve some policy work at the state and national government levels. The scale is massive of what we need to do and the opportunities present themselves.

You have been vocal on reverse mortgages and have crossed paths with them in the past. How do products like these fit into the aging in place conversation?

Reverse mortgages, when utilized honestly and transparently, are a potential part of the solution. They unleash locked-up capital presently in the house and make it available for the needs of an aging population. But, there’s obviously a cost to that.

We want to make sure people stay in their homes for the entirety of their lives. Done correctly, reverse mortgages have a place in this [aging in place] because they are a creative way to make capital liquid for people to use when they’re in a phase of life where they need capital for different purposes. It’s a very efficient way to access capital.

In light of the challenges facing seniors and retirees today—particularly with being able to afford-long-term services and supports as they age—why is it important for this population to explore the possibility of getting a reverse mortgage, or using home equity as another funding source in retirement?

I think the answer is we’re looking for ways to creatively access capital. When a person has earned it and plowed it into their home, it’s locked in their and not available for their use until they pass and it becomes available to their heirs. That’s a rigidity in our system that needs to be made liquid. That’s what I think is the worth I see in reverse mortgages.

It’s very important because we’ve seen more and more evidence that many seniors don’t have the money to take care of themselves in their older years after retirement. They have measured that in a few years they will have exhausted their savings, and here is money that could last for a decade to them and, in many cases, for a considerably longer period of time.

In September, the BPC released a report titled, “America’s Growing
Senior Population: Assessing the Dimensions of the Demographic Challenge.” Essentially, it seemed like the central theme was that the U.S. needs a more strategic approach for linking health care and housing policies and programs. What more needs to be done in this regard, and maybe what are the biggest factors or barriers that are preventing further action from being taken?

We need to find synergies between health programs where resources exist and recognize that we need to keep people in their home and out of expensive nursing care, and instead keep people living in conditions where they are safe and at peace, because that can add years to people’s independent lives.

That is a positive thing, but it requires thinking of housing as related to health and vice versa.

How does something like home health care fit into the equation by addressing this issue of linking housing and health care?

Home health care is very important. One of the most rapidly increasing occupations is the need for gerontological workers. Home care specialists are going to be so important because people are not going to be able to live on their own without some help.

Public sector involvement in helping people sort through their medicines, making sure they are eating properly, even helping periodically with hygienic needs and ensuring that their home is safe—all of those are going to become elements of how we help people live independently. They are also essential to our execution of these other strategies.

Home health care is going to be a rapidly growing field and thankfully we have the younger population that can be those people for the aging population.

What’s on the agenda for the BPC’s Health and Housing Task Force in 2016? Are there any particular areas of focus or initiatives the Task Force has in store for the coming year?

The focal point of the Task Force is to answer the question: what specific initiatives or programs can be tapped for these [aging in place] purposes? No one has looked at health, housing and otherwise from this vantage point or through this prism like the the Task Force. That’s what I think the is the job of this committee and we need to be serious about it.

Written by Jason Oliva

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