Who’s Speaking to Congress on Reverse Mortgage Matters, Anyway?

As members of Congress work to communicate with different industries, including the reverse mortgage business, representatives from those industries—and outsiders—are often called to testify. Sometimes, they are experts on the topics at hand, but other times, their areas of “expertise” may turn out to be less fitting. 

Such was the case in a June hearing before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity. The hearing, on the Federal Housing Administration’s multifamily insurance programs, featured input from a CEO of a registered broker/dealer specializing in foreign markets and securities.

The CEO, Peter Schiff, known for his “vocal and unpopular bearish views of the U.S. economy, voiced prior to the 2008 financial crisis,” according to his company’s website, was called upon to testify, causing a stir within the hearing for his responses to questions posed by members of Congress. 

“Unlike many of my co-panelists I do not come here representing a specific coalition or group that has an interest in promoting the multi-family sector. I am here to represent the interests of the common U.S. taxpayer who will have to make good any liabilities incurred by the Federal government and who will have to live with the consequences of distortive government policies (as we all have been doing co conspicuously in recent years),” Schiff said in prepared written testimony. 

The reverse mortgage industry, too, has seen these types of “experts” come to testify from far reaching corners of the housing world.

A hearing in May devoted to the reverse mortgage industry comprised a panel of industry stakeholders including representatives from the National Reverse Mortgage Lenders Association, Generation Mortgage, AARP and the National Council on Aging. The hearing, titled “Oversight of the Federal Housing Administration’s Reverse Mortgage Program for Seniors,” also called upon two academics participants to testify. 

Dr. Anthony Sanders, Distinguished Professor of Real Estate Finance, Senior Scholar, Mercatus Center at George Mason University and Mr. Houman Shadab, Associate Professor of Law, New York Law School were called upon for their expertise in housing related matters. 

Shadab stressed reasons why the private reverse mortgage market can exist without FHA insurance. 

“Congress should not expand the HECM program,” he said in prepared testimony. “Rather, Congress should consider reducing the loan amounts borrowable under the HECM program and reducing Ginnie Mae‟s HMBS guarantee.”

Sanders went further to suggest that FHA get out of the reverse mortgage business altogether. 

“The Federal government should get out of the reverse mortgage insurance and subsidization business, particularly since there is an easy alternative: seniors sell their home and buy a smaller dwelling or rent,” he said. 

While this may be a possibility for some people, it is easier than it sounds, with so many homes today that have lost substantial value as a result of the housing market crash. Many retirees may not have sufficient income to maintain rent, leaving them with few options for moving. 

Congress must hear from people who are informed and aware on the issues they are called to discuss. While a balanced approach is needed, we have to wonder why outliers and self-proclaimed unpopular views are chosen in such important instances. 

Written by Elizabeth Ecker

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