Missouri Sen. Claire McCaskill, who has described reverse mortgages as “very dangerous,” will continue to push for further reforms of the reverse mortgage market, her spokeswoman said, after the Senate did not consider her amendment to a federal fraud enforcement bill that passed today.
“Here’s the problem: we’ve got the people closing these loans that have no skin in the game,” McCaskill said during a Senate hearing on April 23, according to a transcript. “Guess who’s insuring all these loans? We are. The taxpayers.”
McCaskill previously inserted provisions to regulate reverse mortgages into the Housing and Economic Recovery Act, which was passed last summer.
She is now raising concerns about misleading advertising, the industry’s fast growth, increasing fraud, and the taxpayers’ potential liability. McCaskill said that the rules she tried to introduce into the bill that passed today were needed to prevent the same types of abuses that occurred in subprime mortgage lending from spreading to the reverse sector.
“If we do not learn from our mistakes, we are doomed to repeat them, so I urge all my colleagues to become knowledgeable about this reverse mortgage area, get word to their constituents to be careful about these reverse mortgages,” she said. “They are very dangerous.”
McCaskill introduced the amendment to the Fraud Enforcement and Recovery Act of 2009. The amendment included provisions that would have required borrowers to certify that they live in the home and report when they terminate residence; required that a home purchased with a HECM be owned and occupied for at least 180 days; and required counselors to report suspected fraud and abuse.
The Senate passed the bill on a 92 to 4 vote today without considering McCaskill’s amendment, her spokeswoman Maria Speiser said.
Speiser said in an email today that she doesn’t know in which bill McCaskill will reintroduce the amendment, “but I do know she will continue to pursue this issue.”