[Congressional Record Volume 143, Number 53 (Tuesday, April 29, 1997)]
[Extensions of Remarks]
[Page E785]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




[[Page E785]]



    INTRODUCTION OF THE HUD REVERSE MORTGAGE PROGRAM PROTECTION ACT

                                 ______
                                 

                       HON. GEORGE E. BROWN, JR.

                             of california

                    in the house of representatives

                        Tuesday, April 29, 1997

  Mr. BROWN of California. Mr. Speaker, I rise today, along with five 
Members of the California Congressional Delegation, to introduce the 
HUD Reverse Mortgage Program Protection Act, a bill to prohibit the 
charging of unreasonable and excessive fees in connection with equity 
conversion mortgages for senior homeowners.
  Many senior homeowners, especially in California, have recently been 
victimized by estate planning companies that charge thousands of 
dollars each for information about the Home Equity Conversion Mortgage 
administered by the Department of Housing and Urban Development [HUD]. 
Home equity conversion mortgages, commonly known as reverse mortgages, 
allow senior homeowners--62 and over--to turn their home equity into 
spendable cash without having to make monthly interest or principal 
payments. About 45,000 reverse mortgages have been closed in recent 
years, the bulk of them through the HUD Reverse Mortgage Program.
  Senior homeowners interested in a reverse mortgage are asked to sign 
an agreement permitting the estate planning company to take 8 to 10 
percent off the top of the lump-sum payment as its commission. The 
company who refers the senior to lender active in the HUD program can 
pocket an average of $5,000 to $8,000 for a referral. These fees are 
exorbitant, especially because most, if not all, of the services 
performed for the 8 to 10 percent fee are obtainable free or at a 
minimal cost from a HUD-approved nonprofit counseling entity.
  Unfortunately, as a result of the full court lobbying initiated by 
the alleged estate planning company, a preliminary injunction has been 
issued barring HUD from enforcing its directive to crack down on 
companies victimizing our Nation's senior homeowners. to reinforce 
HUD's existing authority to properly regulate the estate planning 
industry, my California colleagues and I are pleased to introduce the 
HUD Reverse Mortgage Program Protection Act.
  Mr. Speaker, we should not allow senior homeowners to be robbed of 
thousands of dollars in an instant by smooth-talking scam artists. My 
legislation will reinforce HUD's existing authority to protect senior 
homeowners from being charged thousands of dollars for information 
about reverse mortgages they could get from the Government for free. 
For the purpose of consumer education, the bill has a provision to 
require HUD to launch a major effort to make more senior homeowners 
aware of the reverse mortgage program and increase public access to 
HUD-approved entities that provide counseling, information and referral 
services. The bill also has a provision that would allow HUD to 
continue its Reverse Mortgage Program beyond its scheduled expiration 
in the year 2000.
  We should not tolerate those estate planning companies muggings of 
our parents and grandparents, who have made mortgage payments for 
decades. I urge my colleagues to join me in supporting the passage of 
this legislation to help protect senior homeowners from being charged 
excessive and unreasonable fees for reverse mortgage information 
available from the Government for free.

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