“A reverse mortgage shouldn’t be seen as a cost-free way to enhance your lifestyle in retirement,” says John Gannon, senior vice-president at FINRA. “It’s an expensive option, and people need to realize they’re reducing the value of their home.”

Per the FINRA website Mr. Gannon is Senior Vice President, Office of Investor Education. That’s right – Investor Education.

The article was primarily about the Boach and Munoz cases. The problem in both cases was the inappropriate sales of insurance products — life insurance (Boach) and annuities (Munoz) — using reverse mortgage proceeds. Either Ms. Walson failed to inform Mr. Gannon that the topic of the article was these two cases or Mr. Gannon decided to deflect the investment advisor issue and inappropriately attack reverse mortgages.

What is unbelievable is that a senior officer in the FINRA Office of Investor Education stated that home values drop as a result of reverse mortgages. Is this man really that ignorant? I doubt it.

Yes, home equity drops due to reverse mortgage upfront loan costs. Perhaps immediatley following funding because of proceeds taken at funding , the balance due on a reverse mortgage is greater than the total of the liens it replaces and the loan costs incurred but how is home value affected? I doubt that the “investment educators” at FINRA need more financial, real estate, mortgage, and investment education to understand these basic financial concepts.

I agree with Mr. Benelli, that it seems there is definitely some unstated reason for FINRA deflecting the heat away from inappropriate investment advice to reverse mortgages. Does it take that much imagination to guess why?

Thanks for the comment.