DR. BENJAMIN CARSON
SECRETARY OF HOUSING AND URBAN DEVELOPMENT
AT THE LEADING AGE FLORIDA CONVENTION AND EXPOSITION
CHAMPIONS GATE, FLORIDA
JULY 17, 2017
As prepared for delivery. The speaker may add or subtract comments during his presentation.
Thank you for that generous introduction. Good morning. And, thank you for the gracious invitation to join you today. On this day, July 17th, in 1821, Spain ceded Florida to the United States. It was a visionary addition to the early growth of our nation. And, over time, Florida has become one of our most diverse states. Florida embraces that diversity: culturally, economically, and demographically.
There is a saying: “Where America is going, Florida gets there first.” Today, at this event, the journey to the future is underway. Florida is looking to the future, with older Americans leading the way. More and more of our citizens are over 65 years of age … about 15 percent, nationally. And, as our nation ages, we must become wiser, smarter, while expanding choices for seniors.
This is a trend you see worldwide; our demographics are shifting. America must remain a world leader in our philosophies, policies, and programs for senior living. This is a TOP PRIORITY for my department …. TO GIVE SENIORS MORE OPPORTUNITIES, MORE ALTERNATIVES, MORE CHOICES, AND, IF DESIRED, TO HELP MORE PEOPLE AGE IN PLACE. This is what many seniors want, and so, we must help people keep their health, keep their homes, to stay with their families, and to retain physical and financial independence.
Specifically, I want to alert you to three essential initiatives for our nation’s seniors.
First, health and safety. As a doctor, I know we must preserve and maintain good health. And, one of the leading causes of disability and death for seniors is injury from a fall. Approximately one-third of adults age 65 or older fall in their homes. One-third! The cost of these falls is $60 billion a year. That is higher than the gross domestic product of many countries. Preventing these injuries is the best way to maintain freedom, mobility, and good health.
Last month, HUD released a report about the health of seniors and preventing falls. We found that many strategies were overlooked, especially in the design of affordable care facilities, assisted living facilities, and other buildings. What is required is more attention to the needs of seniors. The buildings must be designed, constructed, and maintained to prevent falls.
So, we recommend that government at all levels and philanthropic organizations integrate fall prevention strategies and support efforts in every situation to help seniors stay safely in their homes. They also must remain safe in every building outside the home.
We need to be more aware, and we also need to identify financial resources that may be available to help create and sustain policies and programs that help seniors stay independent. When we do, we will lower health care costs, enable seniors to remain healthy, and retain a high quality of life. For example, in January, HUD provided three-year grants to help several housing facilities hire wellness coordinators and other personnel to keep seniors healthy.
I want you to understand, this is personal for me, as a physician and Secretary of HUD. And, good health and good government are actually twin goals of our republic. An original signer of the Declaration of Independence was Dr. Benjamin Rush. The Rush Medical School in Philadelphia is named after him, and for good reason. He was a fantastic physician, and believed in the foresight of preventive medicine, working for better hygiene, safe housing, and improved sanitation. He was a revolutionary in mind and medicine. For him, good health was the path to freedom, just as freedom came from self-governance. In many ways, historically, he was my predecessor. Making homes safe and secure was his goal, and it is mine.
His legacy survives in another way: good financial health. That is the second area of our discussion. The Founding Fathers wanted you and me to determine our needs and our spending, not some far-off monarchy in Europe or some self-interest in Washington. And our freedom is a continuous struggle. Every day we fight for freedom, looking for ways to have more choices, to make up our own minds, and to use our resources for our needs, in our own way.
In 1969 Congress began a process to allow seniors to borrow against the equity in their homes. Then, in 1988, President Reagan signed the law that allows HUD to insure these mortgages through the Federal Housing Administration (FHA). This allowed for reverse mortgages. Under certain conditions senior homeowners age 62 and over could access a portion of their equity in their homes. You’ve seen the TV commercials with Tom Selleck.
The popularity of these “Home Equity Conversion Mortgages” (HECM) … or reverse mortgages … has grown. As reverse mortgages have become more popular, we have learned more about the needs of seniors. For example, some seniors accessed the maximum amount of their equity upfront, leaving them without sufficient resources to pay their taxes or insurance. Some borrowed so much they were unprepared for the financial turbulence in 2008. Others took out reverse mortgages in their own name, leaving off their spouse. This puts the “non-borrowing” spouse at risk if the borrower passes away. The loan was in the name of the deceased spouse and the home was sold to pay off the loan.
These problems have lingered and need to be addressed. Adjustments needed to be made.
Last year, HUD proposed a new regulation that would make some improvements and strengthen the program, such as:
• Limiting the initial amount of equity seniors can draw down, allowing them access to more of their equity over time;
• Requiring a financial assessment to make certain seniors have enough resources to continue to pay taxes and home insurance;
• Establishing Property Charge Set Asides from HECM proceeds to make property tax and insurance payments;
• Protecting certain “non-borrowing spouses” in the event their husband or wife passes away;
• Making certain there is housing counseling BEFORE seniors sign on the dotted line; and
• Controlling interest rate increases for those with adjustable rate reverse mortgages.
The proposed rule would also:
• Require lenders to fully disclose all the conditions of the reverse mortgage;
• Require lenders to keep paying mortgage insurance premiums until the reverse mortgage is paid or ended (rather than when the mortgage contract is terminated);
• Enable a graceful exit for those who do leave, called “cash-for-keys” (rather than a lengthy foreclose process); and
• Put in place other changes to clarify the process and further protect the seniors borrowing on their homes.
This rule was finalized in January and is now the law of the land. HUD will continue to monitor program performance. We are implementing these changes between now and September, and will provide guidance to help lenders and service providers. Loan documents will be updated and system requirements will reflect these changes.
These updates to the rule are not the totality of what we are doing. Last month, HUD entered into a Memorandum of Cooperation with Japan to explore ways to expand housing opportunities that allow seniors to remain in their own homes and ‘age in place.’ The bilateral partnership will promote increased knowledge and innovation in both countries. One example already underway in the United States is HUD’s Supportive Services Demonstration for Elderly Households in HUD-Assisted Multifamily Housing. The Demonstration provides researchers with information to assess how an enhanced service coordinator and wellness nurse can affect residents’ health care utilization. HUD’s partnership with Japan will leverage this type of information, sharing it with an international audience and allowing the two countries to learn together.
We have also just announced more than $50 million in housing counseling grants to help prospective homeowners and those who want a reverse mortgage make better informed decisions. Here in Florida we have awarded almost $1 million to organizations throughout the State, such as the Miami Beach Community Development Corporation, Port Charlotte’s Comprehensive Housing Resources, and Tampa’s Solita’s House.
Housing counseling helps people buy a home and helps many people stay in their homes. They will be able to age in-place. There will be more financial freedom, more responsible practices, and greater security for seniors.
When we consider financial freedom, we must also look at those who leave the home, or do not have a home. I am very concerned about seniors becoming destitute or forced into low-income housing. Many look to HUD for affordable housing or assisted housing, but they confront a brutal reality. The market is becoming more expensive. Inner cities have become high-end markets, pricing out low and middle class Americans. New York City, Washington, D.C., Chicago, Los Angeles, and San Francisco are just a few of the cities reporting this surge. Now, rising prices are spreading to the suburbs and even rural areas. Some seniors are forced to seek alternatives to homeownership. Where are these seniors to go? Must they become economic refugees in their own country, wanderers forced out by a nation’s economic progress?
This is the third area I wanted to discuss: finding affordable alternatives for seniors.
At HUD, we have been besieged by developers and bankers who want our properties. They make the point that many housing units are aging and will eventually need to be replaced. Where will the money come from? Developers covet our properties because rising demand could turn those properties into money-making condos or apartment buildings.
So, recognizing this demand, we have become creative, especially through public-private partnerships. We have leveraged our properties. We have told developers that they must provide affordable housing along with meeting the needs of high-end buyers. That’s right! The developer must pay for affordable housing units, not the taxpayer. And the units must meet all of our standards, all of our specifications. Rights must be fully protected under the law.
The developer is the source of the funding, or at least a primary source.
So, the HUD budget balance sheet does not tell the full story. In fact, the budget figures are often a misleading, one-dimensional statistic that hides the full story. There is much more happening than merely writing a check.
The leveraging of HUD’s properties has been transformative. It has provided examples like the Waterfront properties a few hundred feet from our Washington office building. The Anacostia neighborhood used to be an economically depressed part of our city. But, over the last few years, there has been much demand for housing and new local businesses. This is due in large part to the construction of the National’s baseball stadium and plans for a new soccer stadium, as well as the development of the near-by waterfront wharf.
The story does not end there. We owned much of that property. Developers wanted those properties. So, we started looking for common interests. We made developers include assisted housing and affordable housing renters as part of any developmental deal. The developer had to provide for them, or no deal. In response, the developers agreed, building housing units that were equal or superior to ours, and allowing residents to use the facilities provided for high-end buyers, such as common areas, pool rooms, and others places that are very nice. All through the creative use of financing and leveraging, liquidity and ideas from the private sector were put to public use. And, it relieved the taxpayers of many costs, providing a budget neutral solution. It was a win-win-win for the developer, resident, and taxpayer.
Each building site requires an individual assessment of the needs of residents. Each is leveraged in different ways. There is no cookie-cutter approach. But, the bottom line is the same. Developers are relieving taxpayers of the cost of affordable housing, and residents benefit. This is the power of a creative public-private partnership in action. And seniors in that housing have a cost-effective approach to living on a fixed or reduced income.
That creativity is part of the American spirit. We put the market to good use.
That is how we must look to the future. We want seniors to find good physical health and good financial health.
I mentioned Benjamin Rush earlier. Let me end with another voice of wisdom: Alexis de Tocqueville. He one of my favorite commentators on our nation. He wrote in his book, “Democracy in America,” that democracy “opens the future.” Indeed, it does, and we must enlarge our vision, and walk into a future of our choice. He said that, in any age, there will be the “tumult of thousands of voices.” Yes, and we must hear those voices, choose between them, and act to increase our freedom. Through good health practices, good financial health, and creative leveraging of finances, we may meet the needs of seniors and maintain their independence and freedom.
De Tocqueville also talked about the freedom of association. He would have approved of this gathering. Associations make democracy thrive. He said no nation enjoyed the freedom to gather like America. Here, when we come together, we listen, learn, deliberate, and act. We hear speakers and then talk freely among ourselves. We make decisions based on competing ideas, vast information, and suggested directions. And, then, we walk into the future of our choice.
Let us walk into the future together. I am pleased to have been part of your exercise of freedom and democracy today.