HECMs could go mainstream if Congress does this - HECMWorld.com Skip to content

HECMs could go mainstream if Congress does this


If Congress enacts these reforms reverse mortgages could go mainstream. Here’s why.

Two U.S. Senators are sponsoring a bill that touches the dreaded third rail of politics. Semafor News reports a bipartisan group led by Senators. Angus King, I-Maine, and Bill Cassidy, R-La. are considering gradually raising the retirement age to about 70 as part of their discussions to overhaul Social Security, Semafor has learned from two people briefed on their efforts.

If such reforms were to come to pass those who had planned on drawing Social Security benefits at younger ages below 70 may have to look to their home’s value as a source of cash flow. Of course, this is not how anyone would want to see the widespread acceptance of reverse mortgages, but then again, necessity is the mother of innovation, and future retirees may have to get creative to secure a decent retirement.

Increasing the minimum age at which one may begin drawing benefits is not the only proposal on the table. Other options include…

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  1. Analysis that does not include seniors who rent or live in facilities where housing units are not available for ownership seems to leave out a significant portion of the senior population. The legislation being presented is the tired old formula for delaying real Social Security (and indirectly Medicare/Medicaid) reforms. Remember many hard working Americans have been priced out of the housing market.

    As the population gains life expectancy in the near term, simply increasing the retirement age seems futile at some point since the longer we seem to live, the lower our productiveness becomes in our latter working years. Numbers alone do not focus on the increased man hours needed for the oldest working Americans to produce the same quality production they did just a decade before. Old age results in a slowing down process.

    As to allowing more compensation to be subject to FICA and MI taxes, that happens automatically each year. What most of the proposals seem to focus on is keeping the same basic concepts in place but doubling the current cap (or completely eliminating the current concepts by eliminating the cap). This would make wages far more expensive to the highest earners than it is today without providing any new benefits to those earners. What would seem much fairer is simply increasing income tax rates on taxable income above say $400,000 by some percentage.

    The nation needs an open debate on this subject.

  2. With the current rate of HECM endorsements not reaching even a 30% rate of their all time peak in fiscal 2009 through almost 6 months of this fiscal year, mainstream status seems a little over the top. It also seems far fetched for decades after passage of such a bill unless existing Social Security Retirement Benefit recipients have their benefits lowered.

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