Quotations from the article by Hillebrand — “It’s a very safe product for a bank. They get a house and they see up front how much it’s worth,” — AND — “They can be a good choice if they’re the only choice.” — AND — “If what you need it for is to fix your roof, then you’re better off with a home equity loan,” — AND — “If you’re already 85, you may not live long enough to amortize those costs.”

In these four quotes, Ms. Hillebrand shows her ignorance of and prejudice against reverse mortgages. As a “senior attorney” for the Consumers Union, one would think she would be more knowledgeable regarding the products on which she comments. It is disappointing to see a person with so much education and so much standing in the consumer protection industry so unaware of reverse mortgages.

First, Ms. Hillegard once again promotes the myth that a bank gets the house. Further she advances the thought that reverse mortgages are only loans of last resort. Rather than suggesting that a home equity mortgage would normally be the best solution in such cases, she dogmatically states that the senior IS better off with a home equity loan. Ridiculously she advises that reverse mortgage costs may be not amortized. What in the world is that supposed to mean? The author previously noted: “Hillebrand warned against taking out a reverse mortgage if seniors do not plan to stay in the home more than three years….” By referring to amortization, she seems to be alluding to the reduction in TALC rates over time. But amortization is an accounting, a finance, and a tax concept related to the allocation of loan payments to interest and principal over time and the allocation of certain intangible costs over time. How is she proposing that “amortization” be used in determining if a reverse mortgage is the right choice for an eighty-five year old?

If we believe we have made any significant headway in educating advisors about reverse mortgages, please reread what Ms. Hillebrand states. I’m sorry but despite all the praise we give ourselves and our industry for educating seniors and their advisors, this is but another sad example of how little has actually been achieved. Just remember self praise has much to do with the self than with the achievement.

Reverse mortgage volume is up only because of HECM to HECM refinances (mostly because of the modest increase in the loan limit), without which the industry would be originating fewer loans as a result of declining home values. More senior homeowners desire a reverse mortgage, but they cannot be helped because their home value has fallen, or because the HECM limit remains too low in high-cost areas.