The National Reverse Mortgage Lenders Association recently announced that the Department of Housing and Urban Development (HUD) approved a single national loan limit of $417,000 for federally insured Home Equity Conversion Mortgage (HECM) reverse mortgages. The new, higher lending limit will enable borrowers to obtain a substantially greater benefit from their homes, if their home value is higher the previous HUD limit. Previously, the HECM program assigned different lending limits by county ranging from $200,160 in rural areas to $362,790 in the highest home value areas. 

This change will allow seniors that have higher valued homes to obtain substantially more equity from a reverse mortgage in areas that were originally not deemed high costs areas.  With this new change and other changes to the fees that reverse mortgage lenders can charge, reverse mortgages may get a second look when it comes to finding more liquid assets in today’s marketplace.  More money and lower fees…..sounds like a recipe for increased popularity.

For more information on NRMLA’s press release, click here.

The U.S. House Education and Labor Committee held a hearing early this week on the impact the credit crunch is having on retirees 401k plans.  On the same day, AARP release two reports examining the state of Americans’ retirement and financial security. The findings of these reports paint a bleak picture for retirement dreams right now and in the future.  The first report, “Retirement Security or Insecurity? The Experience of Workers Aged 45 and Older,” finds that 13 percent of Americans 45 and older are tapping into their retirement accounts, or other investments, to cover day-to-day expenses. It also found that 20 percent have stopped contributing to retirement accounts during the past 12 months, which is further jeopardizing their long-term retirement dreams. For millions, saving for retirement at work is not an option at all.

The second report by AARP’s Public Policy Institute found that about 51 percent of workers do not have pension coverage at their current job. In that report, “The Coverage of Employer-Provided Pensions: Partial and Uncertain,” AARP found that millions of Americans still lack the ability to save for retirement at work as businesses shift the burden of risk toward employees.  It looks like workers closest to retirement may suffer the biggest hit from the financial meltdown and have to delay retirement for up to 5-10 years.  So the question becomes, where is there more equity now…..a senior’s home or their retirement accounts?

For more information on the hearing, click here.

TheStreet.com posted a video interview with Granger Cobb, CEO of Emeritus Corp. and he tries to explain why he thinks the senior housing business is ignoring the market’s turmoil.  The piece discusses that Emeritus is  only down 5% this year, which is better than the broader market.  Cobb states that moves by seniors into their facilities are needs based moves and he states that occupancy rates were up in the second quarter. 

The debt load of Emeritus is high and the question remains as to whether Emeritus will be able to refinance / roll-over its short term debt or convert that debt into long term financing in today’s credit market.  If the market has seen seniors postponing or cutting back on expenses such as medicine and food, can we suggest that people are holding back moving into assisted living as a means to cut expenses or are they just waiting for their homes to sell?

A few weeks ago, the Assisted Living Federation of America (ALFA) CEO testified before the Senate Special Committee on Aging.  The hearing called Honoring Final Wishes: How to Respect Americans’ Choices at the End of Life discussed the importance of respecting end-of-life choices by again Americans and discussed the deference to a senior’s decisions about where and how to live and die are principle foundations of professionally managed assisted living companies.  Citing advances in pharmacology and supportive services, Mr. Rick Grimes, CEO, stated that most seniors wish to age in place and have an average life span of 84 years.

ALFA collaborated last year with the National Hospice and Palliative Care Association to develop a hospice tool kit. This tool kits guides assisted living staff in helping residents with terminal conditions and their families to make informed choices and select appropriate treatment options.

“The goal is to ensure a high quality of life for residents even as they near the end of life,’’ testified Grimes. “Our members work in partnership with hospice providers throughout the nation to make certain that our terminal residents die a comfortable, dignified and natural death surrounded by those who care.’’

Read the full testimony from Mr. Grimes

The U.S. Department of Health and Human Services’ Office of the Inspector General  released a report last week detailing the "Trends in Nursing Home Deficiencies and Complaints" that paints a dismal picture showing that over 90% of that nation’s nursing homes were cited for federal violations from 2005-2007.  The most common deficiency categories cited in each of the past 3 years were quality of care, resident assessment, and quality of life.

The report also showed a greater percentage of For-Profit nursing homes were cited for deficiencies than non-for-profit and government nursing homes in each of the last 3 years.  The report is presented as facts and has no recommendations on curing the deficiencies or improving the conditions from the conclusion drawn.  Clearly, there is room for improvement across the private and public sectors according to this report.

The Federal Reserve recently released its comprehensive report on banks’ 2007 lending practices  that showed that overall mortgage lending dropped sharply.  Total originations dropped 25% from 2006 and that nearly one in three applicants were denied.  The reports findings are based upon information collected from mortgage lending institutions under the Home Mortgage Disclosure Act of 1975 that includes the geographic location of the properties related to these loans, and demographic and other information about borrowers.  The disclosures are intended to help the public determine whether the institutions are servicing the communities housing finance needs but also to assist in the enforcement of the nation’s fair lending laws.

While the system was originally designed for low to moderate income areas and to identify lending to minorities, this act will need to be modified in the future to include age information.  Age discrimination is part of fair housing but is not reflective in the mortgage data collected today that can identify institutions and geographic areas that represent concentrations of discriminatory housing pratices based upon age.  The data includes information on the Federal Housing Administration (FHA) reverse mortgage program but is lumped into the aggregated FHA data.  While information can be ascertained about Reverse Mortgages separately from the HMDA data, what about traditional mortgage products such as conventional, fixed rate loans or home equity loans?

To view the Federal Reserve’s full article outlining its findings on 2007 lending practices, including data break-downs by loan type, geographical regions, and borrower demographics, click here.