Tuesday, February 26, 2013

Reverse Mortgages - Pushed by ALEC Since 1993

Worth 4 minutes of your time

Reverse Mortgages: 

When they work and when they don't


Sorry I can't embed it - you have to go to the site. 


The American Legislative Exchange Council (ALEC) has been pushing reverse mortgages for the elderly since 1993.  In 1993 - ALEC believed that this was how seniors should finance both their healthcare and long-term care living costs - with a reverse mortgage on their only remaining asset - their house (aka - an ALEC option for getting rid of Medicare and MedicAid).  The first notation I have of it was in a report named: "Keeping The Promise: Making Health Care Accessible and Affordable for All Americans"   
 January, 1993.

{Title, enacting clause, etc}
SECTION 1. This Act may be cited as the Reverse Mortgage Enabling Act.
SECTION 2. Statement of Purpose.
It is the intent of this legislation that elderly homeowners be permitted to meet their financial needs by accessing the equity in their homes through a reverse mortgage.

The legislature recognizes that many restrictions and requirements that exist to govern traditional mortgage transactions are inapplicable in the context of reverse mortgages.

In order to foster reverse mortgage transactions and better serve the elderly citizens of this state, this legislature authorizes the making of reverse mortgages, and expressly relieves reverse mortgage lenders and borrowers from compliance with inappropriate requirements
Now, you see ads for reverse mortgages on TV all the time.  I hear friends talking about  them and how they like a good option - I always warn them, that reverse mortgages aren't what they are cracked up to be. 

You see - I figure anything that is cooked up by ALEC is pro-business and somewhere along the line seniors who put their house and lively hood at stake on a deal that is too good to be true - will be hurt in the end.  Somewhere along the line the mortgage, finance companies and banks will win out in the end - if it is ALEC originated and the citizen will get screwed - somehow, someway.

To me this is the next big housing scam (a redo of the subprime debacle - same players, same devastating results) and people are going to get financially destroyed at a time in their life when they no longer have the means or energy to defend themselves.

You see - if it's ALEC "model legislation" or if it's based on ALEC legislation and it looks like it does something that is good for the citizens - in the long run, it is the citizen who will get screwed somehow, someway - while ALEC's private sector/corporate enterprise members will come out smelling like a rose - bigger profits, higher stock prices.


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