The “Asset Building and Preservation” working group of the Massachusetts Asset Development Commission met the day before yesterday (I attended by phone) and covered a lot of interesting ground.
We heard some insightful comments on the state of financial aid for higher education in Massachusetts and across the country (bleak) and the importance of motivating lower-income families to save through 529 plans or their equivalent, which apparently does not increase their “expected family contribution” to a significant extent (generally not more than a few percent), which runs counter to what I had assumed and what seems to be the common perception.
We heard about a surprising state regulatory policy whereby non-mortgage lenders can charge rates higher than the state interest rate cap of 20% simply by sending a notification letter to the state Attorney General; apparently, such letters are not public record unless some kind of court case challenging the lender’s practices provides specific grounds for reviewing the lenders notifications to the AG. No one in the meeting was fully expert on this policy, so it was agreed that some further research on the practice is necessary before concluding if our working group would recommend any policy action in this arena.
We heard from a member of the Elder Economic Security Standard Project of the Gerontology Institute at the University of Massachusetts Boston. An assessment of the financial status of elders is important in its own right, but I was particularly interested to hear about their thoughts on increasing awareness and use among seniors of the “circuit-breaker” property tax credit and the “senior property tax deferral” option. Cash poor seniors with home equity often resort to reverse mortgages, sometimes with excessive interest rates and fees. The property tax deferral is another method of essentially tapping into home equity (albeit with an annual cash impact that’s limited to the amount of the annual property tax burden) without absorbing any loan closing fees and with an interest rate of no more than 8%, sometimes considerably less depending on town policies. In some cases, the property tax deferral could be enough to help make ends meet and thus delay or eliminate the need for a more expensive reverse mortgage. The group discussed ways to incorporate education on such tax issues into the work of existing “volunteer income tax assistance” projects.
I was unable to stay on the line for the entirety of a presentation on the importance of job stability for asset preservation. An experienced union organizer urged everyone to consider supporting the Employee Free Choice Act at the federal level, introduced by Massachusetts Senator Edward Kennedy, to remove obstacles to unionization.
Having met several times now, the working group’s major task is to digest all of the various discussions and suggestions into a set of concrete plans, probably no more than 6-12 specific, top-priority policy recommendations. Not an easy job.