As we all know by now, the Senate likes to have hearings on practically every aspect of the mortgage industry, and the reverse mortgage program is no stranger to congressional scrutinization. Representatives from large organizations with interests in the mortgage industry frequently testify at these hearings, as we’ve noted before when Mortgage Bankers’ Association’s CEO David Stevens did just that in May. Most recently, it was the American Association of Retired Persons’ (AARP) chance to do the same in regard to the reverse mortgage program.
Lori Trawinski, a Senior Strategic Policy Advisor for the AARP Public Policy Institute, blogged recently about AARP’s testimony and suggested recommendations for improving the Home Equity Conversion Mortgage program. The changes suggested intend to “enhance consumer protections and increase the fiscal stability of the Federal housing Administration’s (FHA) Mutual Mortgage Insurance Fund.”
The recommendations are as follows:
- Implement changes to strengthen the HECM program including: financial assessments, tax and insurance set-asides, and limitation of upfront draws for certain purposes though public rulemaking.
- Require HUD to evaluate the HECM program every two years and report to congress
- Implement a suitability standard
- Require lenders to present all loan products
- Conduct a study of HECM for purchase fraud
- Urge the CFPB to conduct a study on the appropriate use of reverse mortgages
Special emphasis was given to ensuring that the HECM program remains true to its original mission of providing older homeowners with access to home equity through FHA-insured reverse mortgages so that they can age in place.