I found the following words to be especially on point in light of the marketing image makers we are being bombarded with in our industry today:

“The findings stated that in connection with the seminars, Abbott sent invitations that used exaggerated and unwarranted claims, and used a slide and handouts that projected unfounded claims of future performance. The findings also stated that Abbott’s public communications contained unbalanced discussions of reverse mortgages and made claims regarding his expertise and status in the financial industry that were misleading, false, unwarranted or lacked a sound basis.”

Marketers consistently fall into the trap of exaggeration; image exceeds the responsibility for content. As a licensed securities representative, Mr. Daniel Allen Abbott had a duty that exceeds most of ours; however, that gap is becoming an issue and I would expect to see the civic liability of that gap narrowing as we are held to higher and higher fiduciary standards.

Less than one week ago, I was writing in a RMD thread where a marketing image promoter was exclaiming who his style of promotion was patterned after. Three names were listed. The second one is a long time opponent to the HECM program and the third, Tiger Woods. None of the individuals listed has more than a marginal personal moral responsibility to their adherents. It was telling that within hours of his remark on Tiger, the current scandal broke.

It is important that originators groom and value a professional image, not a Tiger image. Here in California, the narrowing of the professional responsibility gap was made clearer by the passage of a bill that requires all applicable mortgage originators to put the economic interests of the customer above their own. While some may say NRMLA members have a similar ethical requirement, in California it is much more; it is law.

FINRA has had a double standard for some time on reverse mortgages and the fiduciary standards it places on its members. Rather than emphasizing caution about the use of proceeds, Mary Schapiro as CEO of FINRA (now chairwoman of the Securities and Exchange Commission) gave a speech about a year ago which warned more about reverse mortgages than FINRA members abuse of seniors in poor investment advice on use of proceeds. The head of FINRA investor education then was quoted as warning seniors that the value of their homes (not the equity) would go down if they got a reverse mortgage.

FINRA is more concerned about the product than their members’ abuses with the product. This is just one more indication of that ethical gap.

I applaud FINRA for fining this man and banning him for 60days. In fact, the punishment should have been more severe.

Using proceeds from a reverse mortgage to sell “unsuitable products” to a senior just cannot be tolerated by any segment of the financial world.

But FINRA is taking a very narrow and dangerous position concerning reverse mortgages. Like many, they are taking the easy way out by simply sticking their head in the sand on this very sensitive subject.

According to the article and I quote, “According to the agency, Allen’s firm prohibits engaging in any reverse mortgage business, including the promotion and sale of reverse mortgages.”

You would think “Allen’s firm” would prohibit the misuse of a reverse mortgage not the product itself!

Last time I checked there were 620,000 FINRA Reps in this Country. They represent millions if not tens of millions of clients and a good portion of them above the age of 62. Instead of educating this massive group on the proper uses of the proceeds of a reverse mortgage most broker/dealers simply prohibit engaging in any reverse mortgage business…dumb, dumb & dumber….

Come on FINRA! How about creating a Suitability Rule for reverse mortgages rather than turning a blind eye?

When is the financial world going to start embracing this product???

Go re-read the posts. I was being sarcastic, mentioning Tiger AFTER the scandal broke, with tongue in cheek…. and then told you so afterwards! IT WAS A JOKE, like Saturday Night Live!!! GET IT?? Apparently not! The mention of the three people was to counter your claim that a person cannot be a brand. Are you saying that Tiger is not a brand himself still?rnrnThen, I requested you take this off line – yet you keep bringing it up here.rnrnAre you just salty about my Teddy R. Quote?rnrnJEEZ Critic, get a grip.

Regulators need to hear from real Seniors whose lives have been improved from the proceeds of an FHA HECM. (Even if it’s only the stopping of a mortgage payment for the rest of the Homeowner’s life) I truly believe it is most difficult to make a hard and fast Law that FHA HECM Funds can only be used for living and household expenses. I’ve had Seniors who gave money to special causes while they were still alive because they suspected heirs would not. I once has a an 87 year old female Senior (who was sharp as a tack and still drove better than I) who said: “If you promise to not laugh at me, I’ll tell you what I’m going to do with a little of the money” “I won’t laugh, Beauty (and damn she was–if you young people don’t think 87 year old Women can’t be beautiful, it’s because you are not 71), I said. “Well, She said, “Just one more time, I’m going to buy myself a brand new car.” “Hell, Woman”, I said, “It’s your money, do whatever YOU want with it. If a new car would make you feel better in the last years of your life, then have at it. Just remember, I said, you have to continue to pay your Real Estate Taxes, keep Homeowners Insurance on the place, and maintain the house to FHA standards.” Since the Lady had over a $200,000 line of credit, and She was by nature a most frugal Woman, this was no problem.

Mary Schapiro and FINRA have shown zero understanding of Reverse Mortgages in the past and the way they presented this disciplinary action to the public shows their ignorance even further. rnI believe that Mr. Allen was wrong and that RIA’s should not be promising results or guiding seniors’ use of RM proceeds, but FINRA’s announcement, once again, seems to demonize the reverse mortgage more than it does Mr. Allen.