Arthur Gerold drew the attention of the local media to his New Hope home Monday, where U.S. Rep. Michael Fitzpatrick (R-8) announced the introduction of a piece of legislation he referred to as the "Reverse Mortgages to Help America's Seniors Act."The bill, according to a prepared statement released on Fitzpatrick's web site prior to Monday's press conference, will "seek a necessary improvement to HUD's (Housing and Urban Development)
Home Equity Conversion Mortgage program," also known as
reverse mortgages.
Peter Bell of the National Reverse Mortgage Lenders Association and Fred Griesbach, the director of AARP Pennsylvania, joined Fitzpatrick at Monday's press conference. AARP is endorsing the bill, Griesbach said.
"[The bill is a] tool for seniors who have a lot of wealth tied up in their home," Bell said. "Without a reverse mortgage, the only way to get that wealth is to sell their home."
A reverse mortgage is a unique loan that enables senior homeowners to remain in their homes and financially independent by converting part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment.
The proposed legislation would assist those seniors who Bell referred to as "equity rich and income poor."
"We don't look at credit," Bell said. "We just look at their age and their assets. We are very often the antidote to the predatory mortgages."
Fitzpatrick said he expects the legislation to "essentially raise the cap for reverse mortgages."
The current cap for a
Home Equity Conversion Mortgage (
HECM) loan is $250,000. Fitzpatrick's legislation would remove that cap entirely.
The program's rapid passage created a near crisis in April, Fitzpatrick said, when concerns arose that the cap that limited the number of mortgages insured was being reached and the program would be suspended.
In response, an increase in HECM loans permitted was provided and the volume cap was raised from $150,000 to $250,000.
"Only a complete removal of the volume limit will prevent the possibility of future program disruption and uncertainty in the marketplace," Fitzpatrick said.
Beneficiaries can choose from three ways to receive their money: a lump sum, monthly installments, or they can arrange a line of credit.
"Caps can have a chilling effect," Griesbach said. "The removal of caps sends a clear message that this is a viable program. This is a piece of legislation whose time has come."
Fitzpatrick said he and the the bill's cosponsors - led by Rep. Jim Matheson (D-Utah) - see a considerable need for changing the current structure for seniors, too many of whom, Fitzpatrick said, are struggling to make end's meet.
Bell discussed one senior borrower, who, when presented with her Social Security check, was faced with a "decision between going to the grocery store and going to the pharmacy."
Gerold enthusiastically endorsed the legislation as a walking example of the type of person Fitzpatrick feels the bill would best serve.
"This house remains the only asset I have," Gerold said.
"The reverse mortgage is an absolute godsend. It enables you to use your asset now. You can't use the asset when you're dead."
"I was at my wit's end," said Elizabeth Gardner, a senior who lives in Village II in New Hope and who attended Monday's press conference.
Because Gardner lives in a townhouse development, she needs to follow certain regulations for maintaining her property.
The cost of sustaining such maintenance was becoming near impossible with Social Security as her sole income source, she said.
"Then I started getting the checks about a year ago, and life has been a bowl of cherries," Gardner said. "Truthfully, I think it's a huge benefit."
Fitzpatrick singled out Gerold and Gardner as the "reason I introduced the bill."
"I want our seniors to stay in their homes comfortably, as long as they want," Fitzpatrick said.
"We think that many people will support the bill," he said. "It's good for America, good for America's seniors. We want seniors to stay in their homes."
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Reverse Mortgage Information
