The mayor of a New Zealand region who recently suggested using reverse mortgages to finance the various cost-of-living increases faced by the country’s retirees is fighting back against a backlash over his comments.
Tim Cadogan, the mayor of Central Otago in south-central New Zealand, recently responded to a constituent’s question about a rate increase similar to property taxes in the United States.
After suggesting that qualified borrowers could use reverse mortgages to help pay for interest rate increases, local media reported that he faced a backlash that accused him and other elected leaders of being “out of touch.” Another called the suggestion “disturbing.”
But in the days that followed, Cadogan pushed back against those claims, writing an op-ed that further explained the proposal while telling local media that some voters were “asset rich but cash poor.”
“One spokesperson accused me of being out of touch with reality. But this is the reality I was faced with more than once during an impromptu visit; one elderly man told me that on top of all the other bills that have skyrocketed recently, the proposed rate increase means they buy Can’t afford food or heating bills,” he wrote in his weekly column published on June 8.
Cadogan also spoke to local TV news reporters about the proposal, saying councilors across the country were facing a “perfect storm of increased regulation, increased compliance and increased costs”.
The state’s pensioners, in particular, who face these higher costs being financed on their fixed incomes, have expressed concern about the situation. That’s when Cadogan came up with his reverse mortgage proposal.
“A lot of people said it was an outrageous thing for me to do, and I think it was an outrageous situation for me to say,” he told NZTV this week.
There are both broad similarities and key fundamental differences between New Zealand’s reverse mortgage products and the main products under the US Home Equity Conversion Mortgage (HECM) program.
Although the HECM plan consists of federal housing administration (Federal Housing Administration) U.S. Department of Housing and Urban Development (HUD), reverse mortgages are primarily offered by private institutions in New Zealand.
Regulation is generally considered to be less stringent than in the US, where per capita usage of the product category is even lower in New Zealand, despite lower domestic market penetration.
Most older people in New Zealand are supported by the National Superannuation Fund (NZ Super), which may only cover the cost of basic necessities and little else. Rising food and energy costs impact seniors around the world, leading to increased reverse mortgage adoption in 2022 heartland bankIt is a leading regional lender in New Zealand and Australia.
