Archive for November 30th, 2010

AARP Calls for Withdrawal of Fed’s TILA Proposal Due to Reverse Mortgage Revisions

Posted on November 30, 2010 by Jason

The New York Times, November 29th, 2010

AARP is requesting the Federal Reserve withdraw a proposal and defer
changes to the Truth In Lending Act (TILA) until next year due to
revisions relating to reverse mortgages and the right of rescission.

“Not only would those two provisions greatly undermine existing
consumer protections, they break with Congressional intent and exceed
the authority given to the Board,” said David Certner, AARP Legislative
Policy Director in a comment letter.

Earlier this year, the Fed proposed enhanced consumer protection
and disclosure requirements for reverse mortgages that prohibit lenders
from requiring the purchase of another financial or insurance product
as a condition of obtaining the loan.

“Unfortunately, this prohibition includes a safe harbor provision
that deems transactions to be in compliance if the purchase of such
financial products occurs at least 10 calendar days after the reverse
mortgage transaction has been completed. Allowing for such an exception
essentially nullifies this important prohibition,” said Certner.

According to the letter, the safe harbor proposal also appears to be
“contrary to the intent of provisions of the Dodd–Frank Wall Street
Reform and Consumer Protection Act.”  As part of the law, the Consumer
Financial Protection Bureau (CFPB) is required to conduct a study of
reverse mortgages within one year of being established.

The agency can also issue regulations as necessary for “protecting
borrowers with respect to obtaining reverse mortgage loans for the
purpose of funding investments, annuities, and other investment products
and the suitability of a borrower in obtaining a reverse mortgage for
such purpose.”

Read more of this article.

About Reverse Mortgages:  AARP has, for a long time, supported the expansion of the various reverse mortgage programs offered by HUD, and their concern reflects a worry that reverse mortgages may become more difficult to get.  Consider whether or not a reverse mortgage is right for you at NewRetirement.com.

Ask an Elder Law Attorney: Medicaid and the Primary Residence

Posted on November 30, 2010 by Jason
The New York Times, November 24th, 2010

Q.

I’ve been told that if we put our mother in a nursing home, we
must first spend down all her assets before Medicaid will kick in. But
her major asset is her house. In this economy, with houses not selling,
how will that work? Does Medicaid put a lien on the house and get
reimbursed after it sells?

Also, my sister currently lives in the house. Is she allowed to continue living there until the house sells?

— Lynn

A.

In most states, a house that is a person’s primary residence is
exempt for purposes of Medicaid eligibility — even if the recipient then
moves to a nursing home. (Remember, Medicaid is a federal-state
program, so its rules vary by state.)

But there are two other conditions for exemption. The net value of
the house can’t exceed $500,000. (States have an option to increase
that to $750,000, but only a few have done so.) And the owner needs to
sign a form stating her intent to return to the house, even if that
seems an unlikely prospect and she remains in a nursing home.

In addition, any real estate, including the primary residence, is
exempt if you are legitimately trying to sell it and no one will buy it.

Even if the house is exempt, it may not make much sense to try to
hold on to it. Once the owner is on Medicaid, she will not have enough
income to pay the taxes, insurance and upkeep.

There isn’t much incentive for children or others to pay those
expenses, either, because when the owner dies, Medicaid will want to be
reimbursed. That usually happens by using the proceeds from the sale
of the house. And yes, many states do put a lien on a house when the
owner becomes eligible for Medicaid. This protects the state’s ability
to get reimbursed when the house sells.

Your sister could live in your mother’s house until it sells. But
there may be an even better option. If your sister were to live in your
mother’s house and to care for her for at least two years, and if
because of this care your mother were able to remain in her home rather
than enter a nursing home, then your mother could give your sister the
house without any Medicaid penalty or disqualification.

Read more of this article.

The Graying Work Force

Posted on November 30, 2010 by Jason

The New York Times, November 30th, 2010

My 73-year-old father is retired, sort of. He works as a greeter in a
grocery store in Calgary, Alberta, juggling shifts at work with caring
for my young niece, who stays with my parents after school until my
sister finishes work. You’ve likely seen someone like him in action — an
elderly man or woman who says hello when you walk in, steers you to the
right aisle and wishes you good day on your way out.

My dad, who puts in about 20 hours a week, stands on his feet for
hours and sometimes works late shifts until midnight. Every now and
then, he deals with shoplifters trying to sneak past his post. And yet
he says this is the best job he’s ever had.

Until recently, working after retirement sounded like an oxymoron.
Aren’t those years supposed to be devoted to volunteering, traveling and
visiting grandchildren? But a recent report by the Families and Work
Institute and Boston College’s Sloan Center on Aging and Work found that
a growing number of people continue to work for pay following their official “retirements.” And while they may be motivated by money, many like my father are finding their late-life jobs unexpectedly fulfilling.

Older workers “expect they have to, and they want to, extend their
labor force participation,” said Marcie Pitt-Catsouphes, director of the
center and the study’s co-author. In fact, 75 percent of the
participants over age 50 in the center’s study said they expect to have
jobs after they “retire.” Already, roughly a quarter of older workers
switch occupations after age 50, according to Richard Johnson, a senior
fellow at the Urban Institute in Washington, D.C.

The federal Department of Labor estimates that between 2006 and 2016, the number of workers over age 55 will rise 36.5 percent. That increase will create the grayest labor force since the government began tracking this data, Mr. Johnson said.

Read more of this article.

Working in retirement:  More and more people are doing it.  Some for money, some for the challenge and stimulation, some simply from a sense of having purpose.  Consider whether a job in retirement is the right move for you.

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