Senator McCaskill Fighting Reverse Mortgage Fraud Through Twitter?

Senator Claire McCaskill continued to express her concern over reverse mortgages at Senate Commerce Committee hearing earlier this week.  The hearing included testimony from the Federal Trade Commission, National Consumers League and a few others to discuss “Protecting Consumers During Downward Economic Times”.

During the hearing a range of topics are discussed but towards the end McCaskill turns the focus to reverse mortgages.  “It is very clear to me that these are complicated, expensive financial instruments that, while they may be appropriate in limited circumstances for some seniors with appropriate counseling and appropriate information, they are being marketed now in ways that make my blood boil,” said McCaskill.

She asked Chris Koster, Attorney General for Missouri about what his office has seen in its investigations about reverse mortgage scams.

Advertisement

“I’m aware of the targeting that is occurring as though they were marketing different types of magazines to seniors, my experience is 9 out of 10 of these reverse mortgages and increasingly these sale leaseback agreements have been a  tremendous advantage opportunity for taking by scammers,” said Koster.

McCaskill then asked the FTC representative what its recently formed task force has been doing in regards to reverse mortgages.  Specifically she is concerned about lenders marketing reverse mortgages as a stimulus benefit, which she heard about through Twitter.  Yes, McCaskill is fighting reverse mortgage fraud through Twitter.

The FTC representative said the task force is now in the rule making process for policies on mortgage advertising and are working to address some of the issues McCaskill had raised.  They’re also looking for enforcement cases in regards to these claims and asks McCaskill to forward on the “tweet” she received.

I thought McCaskill was just making this up so I searched Twitter and found her account.  After a little digging I found the “tweet” she is referring to: 

@clairecmc Seniors in Illinois recv letters from Reverse Mortgage lender American Advisor Group in Irvine CA, refer to POTUS Recovery Act

Now, I’m not an expert on Twitter, but I’m assuming that POTUS means “part of the US” recovery act.  Well, reverse mortgages are part of the Housing and Economic Recovery Act of 2008.  If AAG is promoting reverse mortgages as a stimulus benefit, I can see how that could be a cause for concern.  However, the random person from Twitter doesn’t post a link to the letter or offer any real evidence.

I’m a bit shocked that a United States Senator is trying to use random “tweets” as evidence at a committee hearing.  You can watch the video at the link below, reverse mortgage discussion starts about 80 minutes in.

The Economy and Fraud: Protecting Consumers During Downward Economic Times

Join the Conversation (17)

see all

This is a professional community. Please use discretion when posting a comment.

  • admin,

    POTUS is normally an abbreviation for President of the United States. Any student of government acts would easily be confused by this name for the ARRA (American Recovery and Reinvestment Act of 2009, PL 111-5). Even though strongly supported by President Obama, this act was primarily the creation of the Democrats in Congress.

  • Senator McCaskill has definitely targeted reverse mortgages. This has all but become a crusade. The question is why?

    Our industry is full of great salesmen. It is both a plus and a minus. Today while listening to an audio blog declaring the virtues of reverse mortgages, an originator began his sales pitch about using proceeds to purchase expensive recreational items like a motor home. No doubt if this gentleman had a license to sell insurance or a securities license and there were no rules in HERA limiting cross selling, he would have been singing the praises of annuities and financial products.

    Sitting back and listening to his spiel from a senior advocate point of view, there was far less concern for the needs of the senior than there was for promoting reverse mortgages. Imaging how Senator McCaskill, the Minnesota AG, the chairman of the California Assembly Judiciary Committee, Ken Scholen, Bronwyn Belling, and others would have reacted to this blog was like imaging coal being shoveled into the boiler furnaces of the Titanic or wood into the firebox of that historic train engine, The General.

    Reverse mortgages are a wonderful product. It is not the product that is the problem. It is ultimately the imprudent use of proceeds. The difficulty comes when our marketing seems to entice and encourage imprudent decisions on the use of proceeds. It is time we rethink our marketing. What seniors do with the proceeds is their business; what we do to encourage how they are used, is ours.

    If the originator on the blog were asked about the many seniors he had helped and how he had done it, his sales pitch would have taken a different direction. The shame is no one just listening to his blog will ever know what this gentleman is really like and how well he has actually served the senior community. Unfortunately his audio blog was a big disappointment and as to senior advocates, it would be like a poorly performing stock to Jim Cramer at CNBC.

    • I hope nobody is offended by a little black humor; if so I apologize.

      I watched the video of Sen. McCarthy (oops I meant McCaskill) and really liked it when she referred to Time magazine's recent article. She really set the record straight pointing out that it wasn't the lenders who were on the hook for a short sale, but it was you and me the TAXPAYERS. Now, I know that she got an expert witness to say that nine out of ten RM sales people were taking advantage of Missouri RM prospects (excuse a slight paraphrase, but as old Joe M. would have said it's close enough; this ain't horseshoes) but couldn't she also get an other expert to explain why the senior/borrower was paying a 2% up front MI premium and .5% each year thereafter. After all, we don't have an Edward R. Murrow to correct Ms. McCaskill.
      Please tweet, twitter, squeak or otherwise make some small animal noises so she can have the opportunity to correct her correction (old Joe would like that) after all that Time article is now in the Congressional Record.

  • Is MO. the new scam capital of the U.S.? This woman is either nuts, or we don't know what's going on there.
    Where is HUD during these hearings? Why aren't they defending their program?

    • bobl,

      When you're not invited to the hearings, you're not invited. Besides this is not HUD's program. They helped formulate it but were assigned the job of administrating what Congress created and has tinkered with. Like you I wish HUD could proactively represent the program or at least react more than they can. The Senator knows her target and how far she can go.

  • Just what does Clair McCaskill’s husband do…….oh ya right he’s in the Nursing Home Business….way to keep the focus elsewhere Senator…….

  • In the video of her testimony, Senator McCaskill states that the Time magazine article has an error – it's not the lenders who get left holding the bag for short funds it's the tax payers…and she intends to contact Time to correct this. I sure hope HUD, NRMLA and/or the large lenders will be getting to Time magazine before Senator McCaskill spreads more misinformation!

    • Mr. l,

      Mortgagee Letters are just one of the means that HUD has to administer the HECM program. For example, HUD did not lower origination fees to $6,000 or raise the lending limit to $417,000; that was done all through HERA. HUD issued Mortgagee Letters to implement the changes. HUD did not want a $625,500 limit; Congress and the President did that as part of the stimulus package but HUD had to administer the change so they issued a Mortgagee Letter.

      I hope that helps.

  • I think most of us would agree that seniors need protecting from unscrupulous lenders. Truthfully we all know that there are some lenders out there that seek to take advantage. But don't throw the baby out with the bath water.

    The problem is not the reverse mortgage product. It's lenders who encourage seniors to use the funds in ways that harm the borrower. More directly the shame should be placed on the borrower who uses their money for an unwise use.

    I've gotten calls from senior homeowners in tears who can no longer afford to buy food, pay taxes, or keep up their homes. I'd like to know what Senator McCaskill suggest these people do.

    • rodneygoldston,

      McCaskill would probably suggest they move into to one of her husband's nursing homes. Of course, they would have to protect themselves from assault and woefully substandard care, but hey, there's food and shelter…and tax credits aplenty, courtesy of Missouri taxpayers….

  • Don't throw the baby out with the bath water. The problem is not the reverse mortgage it's how people use the money.

    I think all would agree that seniors should be protected from unscrupulous lenders.

    I get calls from senior homeowners who are in tears. Due to fixed incomes and rising cost they can no longer afford to buy food, pay property taxes, repair their homes, etc. What Senator McCaskill suggest they do instead of a reverse mortgage?

  • I’ve had several customers bring me advertising material from American Advisors Group, Inc. referencing reverse mortgage “government benefits”, etc. They are one of the main offenders of the ethical marketing policy our industry should be following. I wouldn’t be suprised in the least if they altered the pieces I saw to include verbiage about the “stimulus act”. We need a branch of HUD to crackdown on this and begin revoking FHA licenses, either temporarily or permanently (for second offenders). How else do we keeps out the “scammers” allowing McCaskill and others to tear down what we’ve spent years building?

  • Mr. HECM_Dude,

    I learned a number of things from your remarks. However, there is one area we see in a different way.

    There are so many new variables in the HECM program, reducing the upfront fee does not seem appropriate at this time. This is the only portion of the MIP that HUD can rely upon.

    For example, will the seniors with higher valued homes produce more risk to the program? What impact will coops or manufactured homes in condo projects have on the model?

    The response from this one committee of Congress seems a little premature. While some Republicans in the House may want to pick on seniors, it is doubtful this is a strong sentiment within both the House and the Senate especially in light of the budget surpluses that the HECM program has produced in prior years. The formula anticipates losses in some years and surpluses in others. This program is supposed to be overall revenue neutral. However, NRMLA will have its hands full dealing with this reaction and proposal.

    But your outline of the HECM program is a great summary.

  • hi, this program is not a good program, is a scam, my husband and i took out a reverse mortgage in 006 he died over this, they over apprased the value of our home at 180,000 when it want worth at best 104,00. they took me off the deed i wasn t 62 and right there they should have said we cannot do this! they promised i would be put back on automaitcially , i went through thousand of dollars in probate which put me back on the deed as represnitives deed, b ut im not on the fianice papers, just found this out 2 years already only months ago. they are trying to make the loan come due and kick me out, i never lost my hometead rights or singed them away. all this is , is to get the homes no mortgage company would finanice me money i owe more than the homes worth. so much fraud , our govenment and urban housing knows this, says i signed papers but does that make it right? they were to put papers in our papers to protect me to stay in the home, like living trust they didnt tell us anything. my husband died on may 7 007 i havent been able to get a attorney to help they want huge amounts of money i have no place to go no money to move with and running out of time,. next hearing feb 4 can anyone help me?

string(110) "https://reversemortgagedaily.com/2009/07/17/senator-mccaskill-fighting-reverse-mortgage-fraud-through-twitter/"

Share your opinion