Legislative: A Deeper Look into the Coalition for Independent Seniors

Written by Brett Varner

The Coalition of Independent Seniors was born out of a growing need to ensure there is a consistent effort to protect the financial independence and ability to age in place for seniors. The relationship between the HECM product and this larger effort fuels the objectives of this nonpartisan lobbying organization.

To get a more detailed picture of the activities and efforts of CIS, we sat down with organization Chairman Jeff Lewis, who is also the Chairman and CEO of Generation Mortgage.  Lewis envisions that the goals of the organization serve to strengthen the importance of the HECM product by solidifying its place in the broader picture of preserving the financial independence of seniors. To that end, the organization strives to foster relationships with lawmakers to make sure they have a solid foundation of knowledge and understanding of the issues surrounding the financing of retirement and care of older Americans.

Brett: How would you describe the primary objective of the lobbying efforts of CIS? What are the current legislative imperatives that the organization feels are most important at this time?

Jeff: Our primary objective is to enable seniors to stay in their home and live a financially independent life to the extent that it can be possibly done. We formed the nonpartisan organization that is intended to reach beyond individual industry interests –  it is supposed to be less parochial than simply people defending their self-interest. It is supposed to be the common interest of seniors being financially independent. In order to secure that and make it a priority, we felt it was important to educate members of Congress on the problem and what the solutions are, one of which is the HECM. But it is vital that the HECM is supported by the people who created it, which is the Congress of the United States, and they need to understand what it is, what it does and why they need to keep it vibrant. We are in an environment that is rife with misinformation and creates the opportunity for people to take swipes at us.

An example would be foreclosing due to tax and insurance default. Wells Fargo suggested in its statement that one of the reasons they left the business was that they didn’t have the stomach for foreclosing on seniors. Look, nobody wants to see anybody, especially seniors, lose their home to foreclosure. It is a horrible process. It is demeaning and stressful, and you’re left without your home, and nobody wants to see anyone go through it.
When you step back, they were essentially saying, “We would rather not go through the unpleasant and necessary task of foreclosing on a few people who were acting in contravention of their contract, which was that they would uphold their obligation. Rather than make a small number of people uphold their obligations, we would prefer a world where this product essentially doesn’t exist.” From their perspective it is better that hundreds of thousands of people leave their home early not through foreclosure, but simply from running out of money, rather than a small number of people having to go through this unpleasant process. That doesn’t make any sense to me. That’s the kind of thing when you go through a meeting with a congressman or a staff member and they have an article or letter from a constituent, it is important that somebody explains to them that the borrowers have an obligation with the loan, and they took it on willingly and understood the ramifications of not fulfilling their obligations with the loans, and if we don’t hold them accountable then the whole process doesn’t work.

As we have made the rounds of 50 or 60 offices of lawmakers, in most cases we found that they have not really given much consideration to the issue of aging in place and of financial independence for seniors and didn’t understand how the reverse mortgage fits into that. It is very important to explain the program to them because ultimately they make it possible for the HECM program to exist.

Brett: In that respect is the organization strategically targeting specific legislators, or is it more of a broad-based approach?

Jeff: The way Congress works is that you have different roles; you have the leadership that affects everything, you have the authorizers who create the programs and you have the appropriators who fund them. We have very good relationships with the folks that are in the leadership of both the House and Senate, and they are going to be influential on a variety of topics. The authorizers are responsible for not only the creation of the program, but for assigning an agency to oversee it. The authorizing committee created the HECM as a way to help keep seniors in their homes. Those people are important because they can change the program, they can rescind that authorization, or they can have a different agency regulate it. If FHA is going to get pressure about things they are doing with the program, it is most likely going to come from the authorizers. The authorizing committees in the House and Senate are the banking and finance committees, and that is where we target our efforts. The appropriators are important because if money is needed to actually fund the program that was authorized and is being carried out by the agency, the only way to get the money is through the appropriators. The appropriators break down by the type of issue they look at, so we are very interested in the HUD appropriators.

Brett: Considering that approach, each time you descend on Washington, is there an overall strategy or do you customize your message for each lawmaker based on what you know about them?

Jeff: One of the things we feel is very important is to try to meet with everyone, whether they have a favorable view, no view or a negative view. We think that the information is powerful and can change people’s minds, even if they have a negative view. We don’t shy away from trying to influence people regardless of what we believe to be their position. The first step in the process is to create an educational and knowledge base, in the offices of those congressmen to make sure that they understand first and foremost what the problems are and the financial trends that are going on with this generation, which make the product important. Then you can talk about the value of keeping people in their own home rather than their children’s home, or in a nursing home, or in another facility. You can talk about the value of that, how it is these individuals’ preference and why it should be the preference for society generally. Then you can layer how the HECM and the reverse mortgage fits into that. Once you have created that basis of understanding, those lawmakers become potential advocates when a specific issue arises. You really don’t want to be in the business of building champions from scratch when there is an emergency going on. You want to be calling up people who already understand what you are doing. They know you, they know the product, and they understand the context. It is likely to be a much more constructive conversation.

Brett: Given the current political environment and how that has created an inherent battle between public policy and budgetary concerns, what challenges has that created for CIS in getting its message through?

Jeff: The budgetary side, the authorizing side, is going to be quiet, primarily. We have an issue right now in getting counseling funded, and we have been working very actively with preserving those funds. Getting them back has been an important initiative for us. Generally speaking, the way the program is supposed to work and the way that it is designed and is FHA’s mandate is that it is supposed to break even. It is frankly not a long-term strategy for the industry to think that we would ever live with a subsidized program, a program that lost money and had taxpayers filling in the blanks. Since that is the way the program has to be, in a lot of respects, I’m not concerned about the budgetary crunch. It is more of a question of whether FHA’s resources are going to be stretched.

The other issue is more of a policy issue where there are people in Washington who generally believe that the government is overly involved in the housing market and they want to pull the government back.  It is not necessarily an issue about HECMs and reverse mortgages, but generally a feeling that the government does too much. We like talking to those people because we think we have a very good argument for them. We describe for them that what the reverse mortgage does is put the government in the kind of position that those people like to see it in: It enables people to help themselves with their own resources. Since the program is not subsidized and doesn’t cost money, the government is actually just facilitating good acts by the public on its own. That’s the kind of government those people typically want to see and they usually understand that argument when we present it.

Brett: How are you able to relate the HECM product in the context of the broader concept of comprehensive financial independence and aging in place?

Jeff: In most of the world, equity release is done in the context of a plan and frankly in combination with other financial products. It is used as a risk mitigation tool. You take the capital that you have in your house and spend it on other products that mitigate your risk. If you need health insurance, life insurance, longevity insurance, whatever you are exposed to, you use that as part of your plan. If you’re looking at how long your IRA is going to last and are talking to the person managing your IRA, you also look at your house and how both resources can be used to maximize the amount of time that money will be available. That type of comprehensive planning is not possible right now because of a section of the 2008 Housing Reform Act that put a brick wall between the HECM and any other financial activity of any kind. While lawmakers accurately perceived that people were being taken advantage of by being put into products that were not suitable, it was not really the HECM that was not suitable; it was the other financial products that were sold to them. It is not the concept of people using the money from the HECM to buy other financial products that is scary, it is that some of the types of products available that are unsuitable can still be sold to seniors, regardless of the source of money used to purchase them.

We are probably talking about a multiyear project in terms of educating enough people about the power of comprehensive planning, and how it can lead to that ability of people to stay in their home longer because the financial emergency does not affect them, because they have the right kind of protection and have mitigated their risk.

Brett: As the coalition grows – and I know part of the growth plan is to add more strategic relationships with other industries and organizations related to financial independence and aging in place for seniors, such as the relationship with RetireSafe – are there concerns about developing competing priorities that dilute the ability to focus on the HECM, or does broader scope of industries create additional leverage for the organization in Washington?

Jeff: No, the idea of the coalition is not about the HECM; it is about financial independence. It happens that one of the most powerful tools to promote financial independence is the HECM. But starting with the concept of financial independence and aging in place changes the conversation and that’s why you can bring in other organizations. Frankly, having aging groups, elder care groups, veterans’ groups, and home health care groups come in, actually creates a much more powerful message: we are not just talking about a product that we benefit from selling, we are talking about a problem in society and how to solve it. Many in Washington are fairly cynical – they assume that somebody coming into their office is defending their own self-interest. One of the things that is important to understand is that there is something beyond our own parochial self-interest at stake here.

Brett: How do the efforts of CIS complement or interact with the efforts of trade associations, such as NRMLA, or broader-based industry groups?

Jeff: We coordinate our efforts actively with NRMLA. It is important that we speak with one voice. When you have so many industry participants within CIS it is important that legislators and others hear one consistent voice. We are happy and pleased to work and coordinate together. We’ve also been looking at ways to work with other trade associations. We’re not looking to isolate ourselves; we’re looking to connect on as many levels as possible with groups that have the same interests.
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As the CIS grows, it looks to continue to foster relationships with individuals, companies and organizations focused on addressing the needs of financial independence and aging in place for a growing population of aging Americans. Lewis sees key roles for people at all levels of participation, from those who are able to make small contributions to support the lobbying efforts, to those who are able to make larger contributions and participate in policymaking and communications efforts in Washington.

While the activities of the organization ultimately serve a larger purpose, they continue to foster the idea of the HECM product as a powerful tool to help meet the needs of seniors in that broader perspective. For Lewis, the key is ensuring that the lobbying efforts extend beyond the immediate needs and maintain an ongoing focus of the long-term development of the concepts focused on financial independence and aging in place.