Retirement Living News

January, 2008

HEADLINES  (Click on headline to read story)

• Senate Hearing and AARP Report Highlight Shady Sales
  Practices Involving Reverse Mortgages
• Home Systems for Aged Help Ease Caregiver Burden
• Science, New Technology and a Reworked Delivery System 
  Will Impact Future Delivery of Care to Seniors
• Seven Western States Agree on Sharing Colorado River Water
• Nevada Once Again Fastest-Growing State: Louisiana Rebounds
• Florida, Alabama and Georgia Reach 
  Interim Accord on Sharing Water

Archive of Past Issues                          New Retirement Communities

NEWS STORIES

Senate Hearing and AARP Report Highlight Shady Sales 
Practices Involving Reverse Mortgages 

On December 12, 2007, the Senate Subcommittee on Aging began hearing testimony and considering evidence that details some of the unlawful sales practices targeting seniors by Financial Freedom Senior Funding Corporation based in Irvine, Calif. The hearings, chaired by Senator Claire McCaskill (D-MO), come on top of lawsuits filed in San Diego involving the sale of reverse mortgage products by Financial Freedom alleging excessive fees and use of proceeds to purchase additional financial products, such as deferred annuities. 

During the course of the hearings AARP unveiled a 200-page in-depth study of the reverse mortgage industry, highlighting many of the sales practice abuses directed towards seniors. 

The groundbreaking report by AARP's Public Policy Institute (PPI) found that while consumers are initially favorable and increasingly aware of reverse mortgages, high costs and other obstacles prevent many older homeowners from applying for these loans. 

The report also warns about the practice of some lenders to sell inappropriate financial products to reverse mortgage borrowers and recommends a series of policy and marketplace remedies to increase consumer protections. AARP presented the report at a hearing by the Senate Aging Committee. 

"Reverse mortgages provide a promising way to convert home equity savings into cash," said John Rother, AARP's Director of Policy and Strategy. "But recent growth in the programs masks the fact that only one percent of older homeowners currently are using them. "High costs and abusive marketing practices must be addressed," Rother added. 

The market for federally-insured reverse mortgage loans was created 20 years ago through the Home Equity Conversion Mortgage (HECM) insurance program, and has grown dramatically in recent years - increasing from 6,600 loans in 2000 to 107,000 loans in 2007. The loans allow older homeowners to borrow against their home equity without the need to repay until the last surviving borrower dies, sells the home or moves out permanently. The AARP PPI report is the most comprehensive study published regarding consumer demand for reverse mortgage loans, including data from the first ever survey of reverse mortgage shoppers - older homeowners who had received reverse mortgage counseling and either took out a loan or decided against doing so. The report also includes a second survey of Americans age 45 and older to track changes in awareness of and attitudes toward reverse mortgages between 1999 and 2007. The surveys showed: 

• Reverse mortgage borrowers are initially favorable about the loans. Ninety-three percent of borrowers said their reverse mortgages had a positive effect on their lives, and 63 percent said they would be "very likely" to recommend a reverse mortgage to a friend. 
• Borrowers are using reverse mortgages to pay for necessary costs. By a margin of 48 percent to 38 percent, respondents who identified "necessities" as a reason for looking into reverse mortgages outnumbered those who cited "extras."
• Borrowers said they had many uses for the funds, but the main use cited by 19 percent was to retire an existing mortgage. " Consumer awareness has increased in recent years, but interest in using reverse mortgages has actually decreased. Seventy percent of consumers 45 and older said they are aware of reverse mortgages (up from 51 percent reported by AARP in 1999). The share of respondents who said they were willing to consider the product declined over the same period from 19 percent to 14 percent. 
• The high costs associated with reverse mortgages remain a serious concern and deterrent to shoppers. High cost was the most frequently identified deterrent (63 percent) for shoppers who ultimately decided against applying for the loan. More than two thirds (69 percent) of the actual borrowers surveyed said that costs were high. 
• Reverse mortgage lenders may be depleting the home equity of borrowers by offering inappropriate financial products. Nine percent of borrowers said their lenders had offered them specific financial products - including annuities and long-term care insurance - which may be unwise investments given the costs and purposes of the loan. 

The report also offers multi-faceted policy and marketplace recommendations to make reverse mortgages more of a mainstream financial instrument. The report proposes: 

• Reducing costs and building consumer confidence in the HECM Program. Congress and the Department of Housing and Urban Development (HUD) should take several steps to reduce program costs, including removing the limit on the number of reverse mortgages that the Federal Housing Administration can insure. That action would promote higher volume and more competitive pricing. 
• Encouraging product innovations to meet the growing diversity of consumer needs. Under the federally-insured program, many prospective borrowers would prefer smaller credit lines (with lower costs) than they can receive now, but do not currently have that option. 
• Increasing funding for consumer counseling and information. Since 1989, the AARP Foundation has received grants from HUD to train and test independent housing counselors who educate prospective borrowers about reverse mortgages and potential alternatives. As the reverse mortgage market grows, HUD should increase funding to expand and improve independent consumer information programs like this to increase public awareness and confidence.
•  Improvements in marketing practices of lenders. Lenders can improve how borrowers manage the funds they receive by participating in education and accreditation programs that promote the ethical marketing of reverse mortgages. 

To read about questions to ask when considering a reverse mortgage, click here.                                                                                             Top

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Home Monitoring Systems for Aged Help Ease Caregiver Burden

Overseeing the aged from a distance is a hot issue for working caregivers. The good news is that technology is available to do some of it. Seniors are overcoming their resistance to electronic monitoring as an invasion of privacy. As vendors make in-home monitoring systems more widely available, resistance is decreasing as many embrace the gadgetry as an aid to remaining independent.

The number of home monitoring customers nationwide is believed to total a few thousand systems. The most common systems use wireless motion or contact sensors on doorways, windows, walls, ceilings, cabinets, refrigerators, appliances or beds to track seniors' movements. Temperature sensors gauge heat and air conditioning. If an elderly person enters the bathroom and doesn't come out, or other typical activity patterns aren't recorded in the home, word can be sent to family members, 24-hour response workers or both. The systems also offer hand-held or wearable "panic buttons." 

Seniors draw the line at some kinds of surveillance. Many protest against the presence of video cameras, says Majd Alwan, who conducted several small studies of monitoring systems as a professor at the University of Virginia. They see motion and contact sensors as less invasive, says Dr. Alwan, now director of the Center for Aging Services Technologies, Washington, D.C., a nonprofit research group. Nevertheless, if technology helps delay the time when a senior must be admitted to a nursing home, Dr. Alwan's research found, a large majority of seniors are willing to accept it. 

Costs of various systems range from $99 to several thousand dollars to install, plus about $35 to $150 a month. Systems range from simple sensors to video cameras and teleconferencing or even a dedicated WebTV channel to post family news (offered by GrandCare Systems, West Bend, Wis.). The QuietCare system is sold by Living Independently, New York. Other vendors include Alarm.com, McLean, Va.; Caregiver Technologies, Oklahoma City; and Community Management Initiative, Green Bay, Wis. 

More elaborate technology is in the works. Researchers at Oregon Health & Science University, Portland, are working on home systems that track changes in seniors' physical and cognitive abilities over time, lining up wall sensors to track seniors' walking speed and computer kiosks to engage them regularly in cognitive tests and games. Such long-term data could provide early warning of such conditions as dementia, says Tamara Hayes, an assistant professor, biomedical engineering.
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Science, New Technology and a Reworked Delivery System 
Will Impact Future Delivery of Care Seniors

Former Speaker of the House Newt Gingrich, speaking at the 17th Annual National Investment Center for the Seniors Housing & Care Industry Conference, captivated attendees with his thoughts on ways to transform America's health and long term care system for the 21st century. Founder of the Center for Health Transformation, Gingrich drew his talk from this experience, from his current role of co-chair of the National Commission for Quality Long-Term Care, and from his book on "Saving Lives & Saving Money." But his passion in this area comes from the first-hand experience of seeing his mother suffer from Alzheimer's. 

The most salient points from his talk: 

• There will be four to five times more breakthroughs in science in the next 25 years than there has been in the past quarter century. Two-thirds of this new science will come from outside of the United States. The biggest breakthroughs will be in brain science, because technology enables scientists to finally study living brains. 
• We will need to know four facets of human beings - the physical, social, mental and spiritual states - to fully understand, treat and heal individuals. For example, women who have social support are three times more likely to survive breast cancer than those who are isolated.
• America needs to re-socialize medicine back into the community. Medicare rules are anti-human. They put the system into a box without consideration for the individual. 
• Computing power doubles on average every 16 months, at less cost per computing dollar. As such, information and wireless technology will play increasingly important roles in how we deliver care. For example, future nursing home rooms will be equipped with video cameras so that residents can have conversations over the Internet with their families. Also, electronics, including games, will be available in each room to keep residents continuously engaged. Alternate realities, such as the popular "Second Life," will help people with illnesses or disabilities experience a "healthy life" through the use of avatars or "animated selves." 
• Twenty-four hour telemedicine centers should be available in each state so that doctors can handle cases at all times and without having to travel. 
• We need to change to a collaborative - rather than a "gotcha" - approach in the way long-term care facilities are regulated. Regulators should become partners with operators to discover the best ways to improve facilities. The whole process needs to become a positive one. 
• We need to build 7-10 long-term care models with the nation's top schools - such as, Stanford and Carnegie Mellon - via the federal government. These case models could be used to build breakthroughs, which could then be rolled out across the country. 
• To change the way we offer care in this country, we need to change our way of thinking. That is, we need to start with the future, look back and think how long-term care, aging and institutions could be better. In doing so, we need to also ask the right questions: how would we redesign our systems, the regulatory agency environment, Medicaid and how we deal with aging in general? 
• The sheer volume of capital will continue to increase three to five percent every year, barring a major disaster. It's been that way throughout time. The flow of capital planet-wide will increase dramatically and provide opportunities and choices to solve the caring of aging crisis. 
• There are three drivers to improve the long term care system. First, we need to find organizations that focus on private-pay to develop models and benchmarks for 21st century care. In this way, replicating them will be cheaper. Second, boomers must support these changes. And third, we need to get leaders to fight for a fundamental change through the system. 
• The National Commission for Quality Long-Term Care is in favor of long-term care insurance. Its members believe in a collaborative approach to regulation and in the need for more flexible systems that allow families to participate in the care of their loved ones.
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Seven Western States Agree on Sharing Colorado River Water

Facing the worst drought in a century and the prospect that climate change could yield long-term changes on the Colorado River, the lifeline for seven Western states, federal officials have reached a new pact with the states on how to allocate water if the river runs short. State and federal officials praised the agreement as a landmark akin to the Colorado River Compact of 1922, which first outlined how much water the seven states served by the river - California, Nevada, Arizona, Colorado, Utah, New Mexico and Wyoming -- would receive annually.

Failure to agree could have had an impact on the development of retirement communities in these states. Furthermore, retirees who may be planning to move to any of these states should embrace this agreement since it should reduce or eliminate water rationing. 

The agreement signed in December to help the seven Colorado River states cope with drought is historic, says the director of the Upper Colorado River Commission. Don Ostler, whose four-state commission is based in Salt Lake City, was present in Las Vegas to see the agreement signed by Interior Secretary Dirk Kempthorne and representatives of all states in the Colorado River Compact. The compact apportions water among the seven states using the river. "It's without a doubt the most significant agreement on the Colorado River since the original agreement (the Colorado River Compact) was signed ... in 1922," Ostler said. Adjustments have been made to the agreement in the past 85 years, but they weren't as significant as this, he said. "So yes, it's been a historic, exciting" time. 

According to the U.S. Bureau of Reclamation, the agreement provides that: 

• Specific water levels of Lake Mead, which is in Nevada and Arizona, will be used to determine when a shortage is declared for the Lower Basin states - Arizona, California and Nevada. By shortage, the agreement means less than 7.5 million acre-feet available for those states. 
• Reservoir conditions in Lake Powell (Utah and Arizona) and Lake Mead will determine the operation of the two reservoirs. Those operations, according to a press release, are intended to "minimize shortages in the Lower Basin and avoid the risk of water delivery curtailments in the Upper Basin." 
• A mechanism will be set up to encourage and account for augmenting and conserving water supplies in Lake Mead to "minimize the likelihood and severity of potential future water shortages and to provide additional flexibility to meet water use needs, particularly under low reservoir conditions." 
• Interim surplus guidelines established in 2001 are "modified and extended through 2026." 

In prepared comments released by the Interior Department, Kempthorne said drought conditions in America and around the world threaten to worsen. "Here in the West, for example, runoff in five of the seven Colorado River Basin states is projected to decline by more than 15 percent during the 21st century." 

If the region becomes warmer and evaporation increases, "we could face a situation in which the amount of precipitation we are receiving today produces significantly less runoff in the future." 

Perhaps most important, Kempthorne added, the agreement among the seven states has a "key provision" that future controversies surrounding Colorado River resources will be handled among the states through consultation and negotiation, before any states resort to litigation. 

Under the new arrangement, operations of Lake Mead and Lake Powell will be coordinated so that both should rise and fall together to an extent, "while still preserving the Upper Basin's allotment of water."
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Nevada Once Again Fastest-Growing State: Louisiana Rebounds

Nevada returned to the top as the nation's fastest-growing state, with a population increase of 2.9 percent between July 1, 2006, and July 1, 2007, according to estimates released last month by the U.S. Census Bureau. 

Arizona, the fastest-growing state between 2005 and 2006, slipped to second place. Both states grew more slowly than they did the year before. Nevada's annual growth, like Florida, was at its lowest since the decade began. "The higher cost of housing in southern Nevada has created a disincentive to relocate there," said Jeremy Aguero of Applied Analysis, an economic consulting firm in Las Vegas, "although more than 33 percent of the people who relocate to southern Nevada come from California, where housing prices are even higher." Nevada's state demographer, Jeff Hardcastle, said the decline in growth there might reflect the fact that no major new hotel-casinos had opened in Las Vegas. 

The data shows that only 35,000 Americans moved to Florida from elsewhere in the United States during this period. Michigan and Rhode Island registered their second consecutive annual losses in population. The outflow of residents from high-cost states like California, New York, New Jersey and Massachusetts to more affordable states also slowed last year. 

Meanwhile, Louisiana began to rebound from its post-Hurricane Katrina population loss, gaining nearly 50,000 people from July 1, 2006, to July 1, 2007, for a total population of 4.3 million. The state lost 250,000 residents during the previous one-year period. Texas gained more people than any other state. Its 2006-2007 increase of almost 500,000 was ahead of runner-up California, which added slightly more than 300,000. California remains the most populous state with about 37 million people.
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Florida, Alabama and Georgia Reach Interim Accord on Sharing Water

The governors of three drought-stricken Southeastern states agreed last month to speed up talks on sharing water during scarcities, hoping to end a nearly 18-year fight over the issue by March. The governors of Florida, Alabama and Georgia and federal officials also agreed not to reduce for now the minimum amount of water that will flow into the Apalachicola River, which feeds a major oyster breeding ground in the Florida Panhandle. That eases the minds of some fishermen and Florida officials who had feared the flow could be further reduced to meet drinking water needs in Atlanta. 

The governors, Florida's Charlie Crist, Georgia's Sonny Perdue and Alabama's Bob Riley, said they agreed that their staffs will continue to work together to come up with a plan for doling out the region's water by March 15, 2008. That was hopeful news to fishermen along the Panhandle Gulf Coast, who were looking at the prospect of water flows remaining lower than they say they can tolerate until June 1, when an interim agreement on flow levels originally had been set to expire. Now, there's a possibility of agreeing on raising the amount of water coming into Florida earlier. 

The fast-growing Atlanta area gets most of its water from Lake Lanier, at the head of the river basin shared by the states. Drawing more water from the lake would mean less for downstream uses in Florida and in Alabama, where the water is used by a nuclear power plant. 

In early December, authorities said less than four months of available water was left in Lake Lanier. Gov. Crist hinted that Georgia might need to increase its conservation -- noting Florida has made moves to cut use since the drought began.
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