Comments on: Generation Mortgage’s Stance on Using Reverse Mortgage Proceeds to Purchase Financial Products http://reversemortgagedaily.com/2008/03/25/generation-mortgages-stance-on-using-reverse-mortgage-proceeds-to-purchase-financial-products/ Reverse Mortgage News and Information Mon, 08 Sep 2008 01:42:14 +0000 http://wordpress.org/?v=2.3.1 By: Gregory Durette http://reversemortgagedaily.com/2008/03/25/generation-mortgages-stance-on-using-reverse-mortgage-proceeds-to-purchase-financial-products/#comment-3757 Gregory Durette Wed, 26 Mar 2008 15:58:05 +0000 http://reversemortgagedaily.com/2008/03/25/generation-mortgages-stance-on-using-reverse-mortgage-proceeds-to-purchase-financial-products/#comment-3757 Thanks for the article. I have three thoughts. One, I completely agree with the points made regarding suitability of products for all seniors. Suitability, however, is a case by case problem. What may be right for one may not be right for all. There is always more than one issue facing a client. It may be financial, family, health, estate, etc., or some combination of all. This is likely what is holding up the Arizona legislators. Laws, no matter how broadly conceived, typically miss all but the narrowest of intended marks. In other words, it is impossible to regulate life and behaviors. I am quite certain, even if some form of legislation is passed, there will still be bad actors preying on unsuspecting seniors. Second, liquidity and flexibility are major keys to successful senior and estate planning. Again, these things have different meanings for each client but, still must be incorporated in a solid, workable plan. The cornerstone of the Estate Recovery Method that my company promotes is flexibility and liquidity to allow for changing circumstances. All financial planners, advisors, reverse mortgage brokers, etc. would be well advised to incorporate these two tenets into every conversation they have when planning with seniors. Third, the writer makes a very good point to question whether it should be the responsibility of a reverse mortgage broker to advise and protect their clients from predatory financial products. I think this opens up a Pandora’s box of legal liability issues that would be best left to those licensed and trained to handle such discussions. A reverse mortgage broker must absolutely be aware of the warning signs, but avoid interjecting themselves into the actual terms and conditions of products. Perhaps the best course of action a reverse mortgage broker could take would be to request their clients always get a second opinion before purchasing any financial products. Thanks for the article. I have three thoughts. One, I completely agree with the points made regarding suitability of products for all seniors. Suitability, however, is a case by case problem. What may be right for one may not be right for all. There is always more than one issue facing a client. It may be financial, family, health, estate, etc., or some combination of all. This is likely what is holding up the Arizona legislators. Laws, no matter how broadly conceived, typically miss all but the narrowest of intended marks. In other words, it is impossible to regulate life and behaviors. I am quite certain, even if some form of legislation is passed, there will still be bad actors preying on unsuspecting seniors.
Second, liquidity and flexibility are major keys to successful senior and estate planning. Again, these things have different meanings for each client but, still must be incorporated in a solid, workable plan. The cornerstone of the Estate Recovery Method that my company promotes is flexibility and liquidity to allow for changing circumstances. All financial planners, advisors, reverse mortgage brokers, etc. would be well advised to incorporate these two tenets into every conversation they have when planning with seniors.
Third, the writer makes a very good point to question whether it should be the responsibility of a reverse mortgage broker to advise and protect their clients from predatory financial products. I think this opens up a Pandora’s box of legal liability issues that would be best left to those licensed and trained to handle such discussions. A reverse mortgage broker must absolutely be aware of the warning signs, but avoid interjecting themselves into the actual terms and conditions of products. Perhaps the best course of action a reverse mortgage broker could take would be to request their clients always get a second opinion before purchasing any financial products.

]]> By: Patty Wills http://reversemortgagedaily.com/2008/03/25/generation-mortgages-stance-on-using-reverse-mortgage-proceeds-to-purchase-financial-products/#comment-3756 Patty Wills Wed, 26 Mar 2008 15:50:49 +0000 http://reversemortgagedaily.com/2008/03/25/generation-mortgages-stance-on-using-reverse-mortgage-proceeds-to-purchase-financial-products/#comment-3756 I think Generation's approach is a good first step. I agree with Michael Pinter that it should be illegal for a RM loan officer or lender to take any commission on any other financial product that the borrower may purchase with the proceeds. While it is not currently illegal, NRMLA should step up to the plate and make it unethical. And HUD could make rules that do not allow this, just as they have rules that do not allow you work in any real estate related field while originating HUD mortgages. Even these reforms would not take care of the whole problem but they would be a good start. I think Generation’s approach is a good first step. I agree with Michael Pinter that it should be illegal for a RM loan officer or lender to take any commission on any other financial product that the borrower may purchase with the proceeds. While it is not currently illegal, NRMLA should step up to the plate and make it unethical. And HUD could make rules that do not allow this, just as they have rules that do not allow you work in any real estate related field while originating HUD mortgages. Even these reforms would not take care of the whole problem but they would be a good start.

]]> By: Michael Pinter http://reversemortgagedaily.com/2008/03/25/generation-mortgages-stance-on-using-reverse-mortgage-proceeds-to-purchase-financial-products/#comment-3752 Michael Pinter Wed, 26 Mar 2008 13:33:06 +0000 http://reversemortgagedaily.com/2008/03/25/generation-mortgages-stance-on-using-reverse-mortgage-proceeds-to-purchase-financial-products/#comment-3752 I think that there are NO suitable financial products that shouldl be "Sold" to Reverse Mortgage borrowers. Any annuity is ridiculous as the Reverse Mortgage has its own built-in annuity with the tenure payment option. LTC insurance is a whole different story, because almsot anyone using the proceeds to buy a LTC policy probbaly wanted the insurance and is only taking the RM to get the funds they need. I don't consider that a "sell." I think it should be illegal for an RM loan officer or lender to take a commision on any other product that the borrower may purchase with the proceeds. I think that there are NO suitable financial products that shouldl be “Sold” to Reverse Mortgage borrowers. Any annuity is ridiculous as the Reverse Mortgage has its own built-in annuity with the tenure payment option.
LTC insurance is a whole different story, because almsot anyone using the proceeds to buy a LTC policy probbaly wanted the insurance and is only taking the RM to get the funds they need. I don’t consider that a “sell.”
I think it should be illegal for an RM loan officer or lender to take a commision on any other product that the borrower may purchase with the proceeds.

]]> By: Gail Wempner http://reversemortgagedaily.com/2008/03/25/generation-mortgages-stance-on-using-reverse-mortgage-proceeds-to-purchase-financial-products/#comment-3751 Gail Wempner Wed, 26 Mar 2008 12:12:07 +0000 http://reversemortgagedaily.com/2008/03/25/generation-mortgages-stance-on-using-reverse-mortgage-proceeds-to-purchase-financial-products/#comment-3751 It's called being proactive--- and is a smart decision on the part of Generation Mortgage. It's clear to see the growing "headline risk" for the reverse mortgage industry. We need more lenders---and our leaders from NRMLA---taking this approach. I'd call it offering education to the borrowers and control to the predatory salespeople. It’s called being proactive— and is a smart decision on the part of Generation Mortgage. It’s clear to see the growing “headline risk” for the reverse mortgage industry. We need more lenders—and our leaders from NRMLA—taking this approach. I’d call it offering education to the borrowers and control to the predatory salespeople.

]]> By: Rogan McGillis http://reversemortgagedaily.com/2008/03/25/generation-mortgages-stance-on-using-reverse-mortgage-proceeds-to-purchase-financial-products/#comment-3739 Rogan McGillis Tue, 25 Mar 2008 21:36:15 +0000 http://reversemortgagedaily.com/2008/03/25/generation-mortgages-stance-on-using-reverse-mortgage-proceeds-to-purchase-financial-products/#comment-3739 Hey John, I don't have a problem with lenders taking a stance in this regard. If the lenders would have taken a stronger approach to self regulation in the last few years we wouldn't be in the mess we are now and the government would have no reason to interfere. I would much rather see lenders trying to clamp down on abusive behavior than the government. Maybe if companies take an active role in protecting their borrowers the government will just leave it alone. And really I would think it's in the best interest of the lenders to make sure the borrowers aren't taken advantage of. Some lenders,( Washington Mutual) in the forward markets, have taken a more aggressive stance about double checking with borrowers to make sure brokers explained everything properly about the costs and it's been working ok. The only brokers that complained about it were the ones who were trying to be sneaky in the first place. Anyways, great article and I'm sure this will be an interesting discussion. Rogan McGillis www.reversemortgagecity.com/blog Hey John,

I don’t have a problem with lenders taking a stance in this regard. If the lenders would have taken a stronger approach to self regulation in the last few years we wouldn’t be in the mess we are now and the government would have no reason to interfere.

I would much rather see lenders trying to clamp down on abusive behavior than the government. Maybe if companies take an active role in protecting their borrowers the government will just leave it alone. And really I would think it’s in the best interest of the lenders to make sure the borrowers aren’t taken advantage of.

Some lenders,( Washington Mutual) in the forward markets, have taken a more aggressive stance about double checking with borrowers to make sure brokers explained everything properly about the costs and it’s been working ok. The only brokers that complained about it were the ones who were trying to be sneaky in the first place.

Anyways, great article and I’m sure this will be an interesting discussion.

Rogan McGillis
www.reversemortgagecity.com/blog

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