[Congressional Record Volume 143, Number 53 (Tuesday, April 29, 1997)]
[Senate]
[Page S3808]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               SENIOR CITIZENS HOME EQUITY PROTECTION ACT

 Mr. KERRY. Mr. President, last Friday, April 25, the Senate 
passed by voice vote the Senior Citizens Home Equity Protection Act 
which will enable the Department of Housing and Urban Development to 
protect seniors against aggressive and unethical practices by firms who 
charge senior homeowners exorbitant fees for obtaining a home equity 
conversion mortgage. I was not able on that day to voice my support for 
this legislation, and I want to do so today. I commend Senator D'Amato 
and the other cosponsors of this legislation for their swift and timely 
action on this important piece of legislation. I also want to thank 
Secretary Cuomo for bringing the problem which this legislation 
addresses to our attention.
  The FHA home equity conversion mortgage program, implemented in 1989, 
has given 20,000 senior homeowners the opportunity to turn the valuable 
equity in their homes into direct cash payments. This borrowed equity 
can be used to satisfy any number of needs, and in the case of seniors, 
escalating medical costs colliding with fixed-incomes often make 
additional financial resources a necessity. Seniors who obtain reverse 
mortgages have median incomes of only $10,400. The ability of low-
income seniors to access their home equity and increase their incomes 
is essential for enabling many seniors to continue living in their own 
homes.
  This legislation is necessary to protect vulnerable seniors who have 
been unscrupulously targeted by certain estate planning services who 
charge fees of 6 to 10 percent of the cost of the reverse mortgage 
loan. Many homeowners are simply unaware that the process of receiving 
a reverse mortgage through the Department of Housing and Urban 
Development is actually free. HUD recently revealed that seniors have 
been bilked for thousands of dollars by unregulated companies that have 
taken a Federal program intended to serve one of our most vulnerable 
populations and used it for exploitation and financial gain. S. 562 
will provide important safeguards for seniors by requiring that the 
mortgagor receives full disclosure of any costs pertaining to the 
origination of a reverse mortgage. Additionally, the Secretary of HUD 
will be empowered to impose restrictions and prohibit firms from 
charging excessive fees.
  Again, I would like to extend my appreciation to Senator D'Amato and 
the rest of my colleagues for their swift action that will ensure 
senior homeowners will be no longer be victimized by exploitive reverse 
mortgage tactics.

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