Unscrupulous lenders, servicers snatching homes from confused family members, the dreaded “scam” word — all sorts of negative perceptions of the reverse mortgage industry were on display during a recent webinar for readers of a public-media website for older Americans.
Held as part of the National Reverse Mortgage Lenders Association’s Reverse Mortgage Education Week, the Tuesday webinar featured professionals fielding questions collected at Next Avenue, a PBS news service that covers baby-boomer issues. Chief among them: Aren’t reverse mortgages just a scam? How can I trust the industry?
The answers themselves probably weren’t anything folks in the reverse mortgage industry don’t already know by heart, but the questions revealed the obstacles that professionals face when attempting to pitch the products to consumers, even amid positive press coverage and a generally changing perception of the loans in the wider media landscape.
Perhaps humor could be a way to go. Phil Stevenson, the owner of PS Financial Services in Miami, said he likes to tell his prospects that, yes, they might one day have to be forced out of their homes.
“We can kick you out of the home when you turn 150 years old,” Stevenson said, referencing the fact that Home Equity Conversion Mortgages are usually scheduled to officially mature on the youngest borrower’s 150th birthday.
“We know none of us will reach 150, at least at this point in history, so you can live there for the rest of your life,” Stevenson said.
He used the humor to pivot into a more serious discussion of tax-and-insurance defaults, noting that these situations represent the overwhelming majority of actual reverse mortgage-related foreclosures and evictions.
NRMLA CEO Peter Bell echoed that sentiment in a discussion of the ways the industry’s safety and reputation have improved in recent years, including the institution of the Financial Assessment rules and increased oversight from the Consumer Financial Protection Bureau.
“The majority of scams are with people who deal with the senior after they have the money, oftentimes members of their own families,” Bell said. “It’s important for people to be wary [of people] that come to sell them different products, whether it’s home improvements, or family members that are urging them to get the reverse mortgage in order to give them assistance. I think you have to be as wary of that as you do of selecting a lender.”
The panel discussion also included a detailed breakdown of the loan repayment process, primarily in response to a question from a reader about the presumably short timeframe that heirs have to make a decision. Tera Guy, a vice president at servicer James B. Nutter & Company, walked through the timeline for the viewers, and emphasized the importance of keeping contact information up-to-date to ensure that heirs have as much time as possible to debate their options.
Lance Canada, a reverse mortgage specialist at First Bank in Raleigh, N.C., touted the need for strong counseling, coupled with input from a family and other trusted advisors.
“This is all laid out, it’s in writing, it’s law, and it’s there,” Canada said, noting that a good counseling program is designed to educate, not persuade, the consumer.
“And sometimes the decision is no, I don’t need it,” Canada said.
View the full playback of the webinar here.
Written by Alex Spanko