Another uneducated individual trying to educate the public. Have to love it!

I agree with tishman; this was pretty bad..

The quality of this segment was awful! This guy hasn't much of a clue about Reverse Mortgages. Why isn't FHA doing PSAs?

I'm quoting adjustable rates to people who do not need all the money now. It's the clients, stupid, not you.

More of the same. Looks like CNN reporting ranks with McCaskill and CR in lack of understanding the reverse mortgage products.

Hey Critic, At least McCaskill or CR were not quoted.

dduck12,

To tell ya the truth, my friend, I am even happier not to see any HECM proponents (other than HUD) quoted. Ya in my humble opinion it really was THAT bad.

Ok, it was a bad report, but if I were selling RMs, I would now educate the prospect and joke about poor reporting. Practically every one, seniors and heirs, can remember an erroneous or slanted story. If they can, then they are on my side of the table. Let any objections come on now. Of course, this is hypothetical, since a prospect may not bring up this article at all. "What have you heard about RMs?" I would ask, hoping they bring up CR or the like so I can knock out any misconceptions.
My point is that without guys like James Garner running around these days, some people may not be aware that this great tool is out there; I like publicity.

dduck12,

Very few prospects bring up stories like this; if stories are brought up, they are generally very negative.

I have yet to meet one single prospect who brings up James Garner or Pat Boone on their own; most of the time if I bring up their names, they remember. If anyone is brought up by the prospect it's Robert Wagner.

Usually the actors listed above do the best job because the advertisers provide good script writers who learn or know the product and one thing these actors do and do well is deliver their lines.

However, I also believe the old saying with a twist: "no publicity is the worst publicity." The sad thing about the CNN segment is that with a little work, it could have been a great segment. It would be very positive if an experienced originator sat down with the financial guy and showed him what a HECM is really all about. Neither of these reporters nor CNN appear to be biased against HECMs. This seems like a real opportunity for an originator. This also seems like an outreach opportunity for the NRMLA staff or industry NRMLA member volunteers.

Sorry for belaboring the point. We generally agree: "just spell my name right".
With reluctant prospects, or negative ones, I meant to actually solicit things like Robert Wagner ( I couldn't remember his name, but the impression was there) and even the sloppily written stuff like CR and CNN, and use them as "strawmen". Get any objections out in the open and answer them, I feel.
Have a nice weekend and I wont belabor on Labor Day any more.

dduck12,

Thanks for the response. I'm here on the West Coast and am not always aware of what happens in places like "the Big Apple." It could be that in some parts of the country, the prominent ads were with James Garner rather than Robert Wagner.

Getting negative things out in the open is a great technique. Many times it really helps.

Not long ago, a couple who live near the Will Rogers Ranch in LA came into my office. I had talked with the husband for a few minutes one day before that and then he told me he and his wife were coming to my office for an appointment. When they arrived, I could tell all the wife wanted to do was leave.

After the husband introduced them and told me a little about their situation, he turned it over to his wife. She promptly put an article in front of me on reverse mortgages. Of course it was primarily a negative anecdote. It was also very well written with some clear and positive reasons for seniors to look for other sources of financing. Fortunately that morning I had read the same story in RMD. As we sat there I first pointed out the positive reasons not to get a HECM and then refuted the wrong ones. At the end, she smiled and told me: “I don’t know why but now I trust you. Honey, I hope you brought your pen, we are getting the reverse mortgage from this gentleman.” She had not come prepared to stay so the drive to our office plus the meeting was wearing on her but she (and he) is very happy with what their HECM is doing for them.

Your points are well taken. Enjoy the holiday.

To ImDave,
I would hope you and all lenders offer the variable rate reverse mortgage! I have not heard of lenders not offering it? The fixed rate it not for all? What if a client has a home paid in full and doesn't want the lump sum as a fixed rate would require? You are just putting all of your clients in fixed rates? If so, we are going to have many more terrible stories because the fixed rate is not for everyone!

Bad assumption. I would not be a lender for love nor money. i am a private consultant working with those seniors that lenders have turned down and have referred to me.
To answer your question, most lenders only are offering one variable rate next to a fixed rate on the RMAs presented to the client and in most cases it is so low that the client can't do the reverse using their numbers. As late as several months ago, there would have been 3 variable rate comparisons and maybe a fixed rate for the client to pick from. TNow, the fixed seems to provide a better solution in most cases. I agree about the lump sum though and it is typical of the program that HUD pushes folks to the fixed on one hand and penalizes them when they have to use it to make the deal work. For instance in addition to lump sum, they cannot lock their rates on fixed until the loan has been approved and that often times will blow up a deal at the 11th hour. The program is shot full of inequities like that but no one seems to care and again it is the senior who suffers.

ImDave,

Come again. HUD is not pushing anyone into anything. HUD insures HECMs. Because of risk considerations, many at HUD would prefer a better balance among the products currently being originated.

Fannie Mae is the principal buyer of adjustable rate HECMs and they require margins on adjustable rate HECMs to be at or above 2.5%. Again for risk purposes, HUD would like them lower. Many commentators on this website have expressed their concern over the margin issue for months.

Please check out Bank of America.. Their comparison sheet clearly shows three distinct HECMs -- monthly adjusting, annual adjusting, and fixed rate; their software is referred to as ReverseWare. Our firm does the same. By the way, RMA is software specific to Financial Freedom.

Since the expected interest rate on fixed rate HECMs have changed little in 2009, what point are you trying to make?

This is the first calendar year that I have ever recommended an annually adjusting rate HECM to anyone. We have funded several of them in the last nine months.

What is it you do? What is a "private" consultant? Is this in contrast to a "public" consultant? While most consultants are self-employed, I have never seen the adjective "private" used to categorize a type of consultant.

You need to associate with some good originators. I think your ideas and feelings about the industry would change substantially.

I normally do not participate in internet functions like this but I thought for once it might be a venue that could actually do some good. I was certainly mistaken.

It's really easy to stand apart from an issue and do what you do because you never see the damage done to seniors up close and personal. In reading several of your responses to different comments, it became clear that you take no positions other than to be opposition to any comment made.

Well, I took the bait, and you've had your ten minutes on my stage but I will no longer engage in this Shakespearean venue, "full of sound and fury, signifying nothing".

ImDave,

Please note this is only my second reply to you. My first reply was to your third comment on this thread which was a negative reply to Mr. Smith about lenders. After my first reply you complain and imply that I baited you so that I could make that first reply “full of ….” Please back up that claim.

Sir, I admitted my ignorance in not knowing what a “private” consultant is. I pointed out, that HUD is not the villain you made them out to be. I also pointed out that many of us show three loans on the comparison sheet which counters your charge.

You say I take no positions? I plainly told you that you needed to associate with some good originators for one. I clearly took another; your expressed opinions need some work when it comes to facts.

Then you write: “you never see the damage done to seniors up close and personal.” The damage I normally see is what people with biased opinions do to seniors who need the help of a HECM but are holding on to those biased opinions to their own detriment; these self proclaimed "experts" bluster how they are the experts, then make factual misstatements and cannot take the mild heat of being corrected. Yeah, I see it way too much.

I also receive several calls everyday from seniors who are underwater, going deeper in debt, and have no money to pay off the difference between what they owe and what a HECM will provide. I help who I can, tell others to seek loan modification with their lender even helping some find the loss mitigation group, and refer yet others to reputable loan modification providers.

As one who is on the frontlines everyday -- I am concerned about how Congress will actually “fix” the perceived HECM budget shortfall, hoping it will not be on the back of seniors and looking to NRMLA for direction on what I can do.

I am also concerned about issues in HERA that are coming home to roost. Soon Fannie Mae will be forced by law to reduce their investment in mortgages. Right now Fannie Mae buys almost all of the adjustable rate HECMs from bankers. Where will we sell our adjustable rate HECMs if Fannie Mae must reduce or terminate those purchases after the end of the year?

Yeah, Fannie Mae facilitated much of the forward mortgage mess, but Fannie Mae is actually trying to help us by finding other investors in requiring higher margins so that they will compete with Fannie Mae for these loans. Yeah, I do not like how they did it and complained but now it is time to find solutions. Did you complain to Fannie Mae and what solutions are you advocating or more importantly seeking?

Congress needs to cut out an exception for HECM purchases by Fannie Mae. So far such suggestions have fallen on deaf ears.

I do not blame you for not wanting to be a lender. It is many times a thankless job that requires accountabliity and reporting to others for what one says or does.

I'm sure there are things I can learn from you but you want to walk away. That's OK but please go and help some seniors.

Come on imdave. His bark is worse than his bite. And, I think we all might benefit from a different viewpoint sometimes.

Thanks, but no thanks.

It would be interesting to note how many lenders even bother with variable rates anymore since those in power got to mismanaging the margins to the point that the only real choice left for potential borrowers or lenders too for that matter is the fixed rate and it just killed the open competition among lenders. It is a shame that the very people for whom this program was created are having to suffer for the sins of those who are to provide the service.

A great story but there are multiple problems with this presentation: 1) Unless it is a fixed-rate reverse mortgage, it is a home equity line of credit; 2) The borrower does not need to own the home "free and clear. Most of the borrowers that we work with have existing mortgages of significant amounts on their homes when they take out a reverse mortgage; 3) It is no way “like an interest free loan.”

A great story but there are multiple problems with this presentation: 1) It is a home equity line of credit; 2) The borrower does not need to home the home "free and clear." Most of the borrowers that we work with have existing mortgages of significant amounts on their homes when they take out a reverse mortgage; 3) It is no way “like an interest free loan.”

Mr. Smith,

Not all HECMs are HELOCs. We have closed-end HECMs; they're fixed rate and they are becoming a greater percentage of the outstanding HECMs each and every day.

A lot of people mistake the concept of no monthly mortgage payments with "like an interest free loan."

You are correct. We too offer fixed-rate HECMs, which are not legally HELOCs.

People may mistake no payments with interest free, but that is a huge mistake.

I help 'seniors' do reverses every day and I can tell you that if half of what this guy said on CNN was true, the vast majority of my clients would not want to do that and I would encourage them not to. The program really can help folks in need and some who are not. They must have the program explained in a way that clearly enables them to make the best decision for them. I will admit to telling some of my folks that this program is not or cannot be for them, but the vast majority are extremely happy when we are able to salvage their homes and generally improve their quality of living.

Some take the position that if the product, the originators, or the lenders do not come under fire, any TV segment is a good segment. For marketing purposes a lot of times that is very true. HOWEVER, it would just be nice when someone is reading off of a sheet of paper, they would be reading something that really had to do with a reverse mortgage.

So by watching this segment, I learned I cannot owe much on my home but if my home is worth $200,000, because I will only get monthly payments, I will get about that much out over time. I also heard fees are piled up at the back end of the loan. Wow, now I know it is recourse debt because my heirs or I will have to pay it back. I also learned reverse mortgages eat up equity (is that also true if I pay money in?).

They are nice people, looked sharp, had great voices, but as the saying goes "a little knowledge is a dangerous...."