Thursday, May 16, 2013

My Consumer Financial Protection Bureau Los Angeles Second Day Comments about Seniors and Reverse Mortgages.

Seniors and Reverse Mortgages

One group of homeowners with the highest probability of having paid off a home are Senior Citizens. Seniors who reached adulthood in the 1940's, 1950's, 1960's, and 1970's had the opportunity to purchase a home for a relatively low cost, and over the course of 30 years pay off that home.

When Dodd Frank came into law, it seemed to miss a very important point regarding seniors and reverse mortgages. Many Seniors have already paid off their home, to treat them like they were in their 30's and 40's again and needing to prove they can completely pay off any home equity loan they take out seems daft.

Lets apply Dodd Frank logic regarding Seniors to Sports and the Hall of Fame. Do we expect Hall of Famers to every 10 years reprove they can hit a home run, strike out a batter, score 30 points in a basketball game, turn a hat trick in hockey, or they will lose their hall of fame status?  No.

Yet, the Dodd Frank Homeowners Hall of Fame forces seniors who responsibly paid their mortgage in full already, to prove once again at an advanced age that they can once again pay off any COLLATERALIZED loan that is now taken out against their home.

This "prove yourself again" mentality is obtuse thinking at best, and paper violence at worst against generations of people that were forced to fight through World War II, the Korean War, and Viet Nam, yet proceeded to also work a steady job their entire adulthood until their home was paid off.

The snatching and grabbing of a senior's home in small increments by the following yearly costs, Property tax, Fire insurance, Home Insurance, Flood Insurance, interest rate charges on a reverse mortgage, and Mortgage Interest Insurance has grown too large and burdensome.

Cannot we not do better than forcing Mortgage Interest Insurance premiums on our seniors? Yes, we can. Here are some suggestions / Solutions I would like the CFPB to consider.

Alessandro Machi   Page 1 of 2

Safe, Effective and Responsible 
Senior Citizen Mortgage Insurance  Alternatives.

Monthly Draw Limits.

A Senior agrees to a monthly draw not to exceed 800 dollars on a paid off home worth 150,000 dollars. In exchange for this monthly draw, no mortgage insurance premium is charged. Why should there be? It would take 10 years for the senior to pull 96,000 dollars out. By then, it is possible the home will have increased in value to 200,000 dollars, basically limiting the potential for the draw to be worth anywhere near the present value of the home, therefore no real overpayment risk exists that would justify forcing the senior to carry Mortgage Insurance Premiums.

    Ongoing CareGiving Services

If a son or daughter wishes to provide Caregiving Services for their parent or parents, a monthly home equity draw of a modest amount, say $1,000 a month, could be transferred to the son or daughter in exchange for living with the parent and being their primary CareGiver. The son or daughter's draw could be taxed like regular income if they choose. The government could even kick in $500 a month as an additional incentive. If the son or daughter is already on the deed, they should not be forced off.

Why pay the son or daughter out of the home to provide CareGiving Services AND provide them a small governmental stipend as well? The elder population is about to explode and 1,500 dollars a month is a LOT cheaper than the government paying out 4 to 5 times more per month to keep a senior in an assisted living situation. The quality of life would be greatly enhanced as well if the senior could remain in their own home.

Daily Reorientation is more easily achieved if a senior lives in the same home that they have lived in for the past 10, 20, or 30 years, and this might drive down health care costs as well. Other savings ensue as well regarding conservation of resources. The son or daughter significantly lowers their own cost of living, not necessarily a bad thing as populations increase and scarcity of resources continues to grow.

Alessandro Machi   Page 2 of 2

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  1. Thank you for this. I am tired of being a culture continually groomed for fleecing by the Economic Hit Banks.

  2. Your proposals to help seniors makes good sense. The problem is that the criminal cabal who are the ones running this country into hell, do not want seniors to live long, use up any government services and actually have any financial benefits going to their offspring. They are hell bent on raping the population of any and all assets as quickly as possible. The controls that are attempted to be put upon the crooks are quickly whisked away once the lobbyists get into the faces of Congress and give or promise them rewards for making sure no "real" controls get put upon those financial wizards of corruption.


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