Generation Responds To Consumer Reports Reverse Mortgage Article
February 20th, 2009 | by admin Published in Generation Mortgage, News, Reverse Mortgage | 4 Comments
Generation Mortgage released a statement earlier this week in response to Consumer Reports Money Mistakes: Risks to Watch Out For article. Consumer Reports listed reverse mortgages as one of five financial “come ons” and Joe Morris, chief executive officer of Generation called the article, "Irresponsible, misleading and poorly-researched journalism."
Morris continued, "Most experienced financial professionals would agree that a reverse mortgage is a powerful financial instrument that requires careful borrower consideration and government-mandated counseling. Generation Mortgage and our peers adhere to a strict, self-imposed code of conduct which exemplifies the industry’s commitment to maintaining the highest of ethical and professional standards."
"It is not the first unfair representation of our industry and it is unlikely to be the last. Generation Mortgage is a company built to serve the financial needs of seniors. As such we feel dutiful in representing our customers, our company and our industry in speaking out against the erroneous claims of these self-appointed consumer advocates. It would be tragic, especially amid the current economic crisis, if even one senior facing serious financial challenge should fail to consider a reverse mortgage as a solution because of irresponsible reporting from Consumer Reports," Mr. Morris concluded.
Other people like Dennis Haber also voiced their opinion on the Consumer Reports article as well.
Generation Mortgage Takes a Stand for Reverse Mortgage Industry
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February 21st, 2009 at 9:43 am (#)
I want to applaud Mr. Joe Morris & Mr. Dennis Haber for standing up for our industry, NARML should comment. When I read about these articles my first thoughts are here we go again, fear tactics to sell their rag. But the ignorance out there is huge on all levels, which just gives us more opportunity to correct it and be successful doing it, and of course be very ethical in going about our business.
An example of the ignorance that I came across recently was very interesting. I had a client who told me that his financial planer told him he would not qualify for a reverse because his house had to be worth $250,000 it was worth $150,000 and he was free & clear and old enough.
I know every one who has been doing this for a while has stories like this and probably more outrageous. Again thank you for speaking up. Remember its only worth doing if you do it in reverse.
February 21st, 2009 at 1:48 pm (#)
Consumer Reports should have compared the cost of a reverse mortgage to the conventional neg am loans at the exorbitant interest rates they charged, where they lent borrowers 80% to 90% of their equity with no regard for their ability to make that monthly payment. The result of this irresponsible lending is the millions of borrowers that no longer have any equity and are either in foreclosure or have lost their homes to foreclosure. These high loan balance loans were provided to an enormous percentage of the senior population, who can’t make these payments. Unfortunately these seniors are unable to eliminate their mortgage payments because the amount they would receive from a reverse mortgage, will not even come close to the reverse mortgage loan amount available to them.
Although reverse mortgages are also neg am, the product structure restricts the amount of available equity to be encumbered, unlike the millions of loans that were structured for financial benefit of others, with no concern about the borrowers retained equity.
Our company has begun to experience the backlash. Borrowers who were interested in moving forward with their reverse mortgage, now have serious concerns about their decision. Thanks to the Consumer Reports prejudicial article containing inaccuracies and definately excluded objectivity, many lenders will receive similiar hesitations from potential borrowers.
I hope that each of the CEOs of the largest reverse mortgage lenders, NRMLA and those Senators that understand the benefits of reverse mortgages will write response letters to Consumer Reports. The honest thing for Consumer Reports to do, is to publish some of the excerpts from the letters. I have a sense though, that Consumer Reports will not be willing to do so.
February 21st, 2009 at 10:05 pm (#)
How about our hungry banks giving us a bad name with higher margins even though they are borrowing money paying low interest rates to borrow and gurantee their money and now they have increaesd margins from one time of 100 to now 325 and looking at 350. so when raates go back to 5 and 6% and7% we will see 8.50% and 9.50% and 10.50% rates and higher. which brokers will say don’t worry you will not have to pay it till you die. What if I senior wants to move and use some of the equity left to be near their family but with higher interest rates thier will be no equity left.We will be no better then forward mortgage brokers with the option arms and interest only loans and negative interest loans. I for one am a shamed what my industry has come to. We give loans to 80 year old people with thier families living with the and we promised then that they will be able to stay in the hom after their parents die only to find out financil planners have sold them investments that are no longer worth any thing or is dow a lot. and with the higher intrest rates they owe more that home is worth. We tell them they will never owe more than the home is worth 1/2 truth they are not responsable but if they want to keep the home they have to pay off the loa which can be much more than the home is worth some times.
Lets get Our President to lower these margins now.we can have the loans modified!!!!!!!!!
February 23rd, 2009 at 11:39 am (#)
It is a shame that Consumer Reports as savvy as they are make such a huge error in judging the reverse mortgage loans, which in many cases is the only viable help for millions of struggling seniors.