AARP, one of the largest and most powerful lobbying groups in Washington, D.C., is advocating for reforms to the Home Equity Conversion Mortgage (HECM) reverse mortgage program, which falls under the umbrella of the Federal Housing Administration (FHA)/Department of Housing and Urban Development.
The AARP has been pushing for reforms to the HECM program for years now. During a Senate committee hearing on reverse mortgages held on June 18, Lori Trawinski, senior strategic policy advisor for the AARP, testified and made six recommendations for improving the program, some of which parallel recommendations included in recent House and Senate proposals.
AARP, however, is advocating for changes regarding financial assessments, tax and insurance set-asides or escrows, and limitation of upfront funds for certain purposes via the public rulemaking process. A representative said the group is not endorsing proposals in either the House or Senate.
AARP is also pushing for a review of the HECM program every two years, with the results furnished to Congress. The group also seeks to establish a ‘suitability standard’ so that borrowers are matched to financial products based on their eligibility (currently, lenders can recommend any loan product).
AARP is also calling for a measure that would require lenders to disclose all of their loan products so that borrowers know about all of the options available to them, not just the ones lenders want them to know about.
Finally, AARP wants the Consumer Financial Protection Bureau to conduct a study on the appropriate use of reverse mortgages, as many Americans are now using them as a type of investment portfolio insurance.
‘Care must be taken to ensure that the HECM program remains true to its original mission,’ Trawinski wrote in a blog post, ‘to provide older homeowners with access to home equity through FHA-insured reverse mortgages so they can age in place.’