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HUD Archives: News Releases

HUD No. 97-263
Further Information:For Release
In the Washington, DC area: 202/708-1420Wednesday
Or contact your local HUD officeNovember 12, 1997


WASHINGTON -- Housing and Urban Development Secretary Andrew Cuomo today called on the House to give final passage to legislation that would stop a reverse mortgage scam victimizing elderly homeowners and would extend reforms to replace and transform the nation's most blighted public housing.

"Failing to pass this bipartisan legislation would deal a terrible blow to older Americans and leave them dangerously vulnerable to financial disaster," Cuomo said. "We must not turn our backs on our parents and grandparents. We have a responsibility to protect America's senior citizens from white-collar muggers who rob them of thousands of dollars with a stroke of a pen."

Reverse mortgages allow homeowners 62 and older to borrow thousands dollars against the value of their homes, with repayment delayed until the borrower dies or moves out.

The legislation -- called the Senior Citizen Home Equity Protection Act -- was passed earlier this year by the House in slightly different form, and then passed by the Senate last week in its current form. It would outlaw actions by con artists who exploit the reverse mortgage program by charging senior citizens needless fees of up to 10 percent of the total amount borrowed, simply for providing information on the program. HUD provides the same information at no charge.

The scam can rob a senior citizen of up to $5,000 on a $50,000 reverse mortgage, and $10,000 on a $100,000 reverse mortgage.

In introducing the bipartisan legislation with Cuomo on April 10, Senator Al D'Amato said: "Excessive reverse mortgage servicing fees are gouging low-income seniors, who are usually on fixed incomes. That is just plain wrong. Our legislation outlaws this despicable practice and protects our seniors from being preyed upon by sharp operators."

Congressman Rick Lazio joined in introducing the legislation on April 10 and said at the time: "With the support of Secretary Cuomo, the legislation I have introduced today will help rid these unconscionable practices and maintain a valuable instrument of security for our nation's senior homeowners."

The legislation also provides for reforms that are critical to the continued transformation of public housing, such as providing local housing authorities with flexible financing tools to create mixed-income developments.

"If this bill does not pass before Congress adjourns, it could jeopardize the historic and bipartisan reinvention of public housing that is now underway across America," Cuomo said. "Tens of thousands of dilapidated and dangerous public housing units are coming down and being replaced throughout the country. Without this bill, the construction of more than 2,000 units of mixed-income public housing would be stopped."


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