More journalists continue to speak out in defense of reverse mortgages. Tom Kelly writes that Reverse mortgages shouldn’t be lumped into “bad” category for the Spokesman Review and says that “Comparing every loan’s shortcoming – real or perceived – to a “subprime” product needs to stop.”
He points to the comments made by the OCC’s John Dugan earlier this year in Orlando where he said, “Consumer compliance risks with reverse mortgages are real, and indeed, I am struck by some of the similarities to the risks of subprime mortgages.”
Former Federal Housing Administration Commissioner Brian Montgomery has played an important role in the programs development and sees a bright future for reverse mortgages. Montgomery was stunned by Dugan’s comments and immediately stated his opinion in writing to one of the nation’s top banking officials:
Your comments may have created unnecessary mistrust and confusion about a product that has a very successful track record of giving thousands of seniors the opportunity to use the equity in their homes to maintain an independent lifestyle. I worry that your comments could dissuade many who could truly benefit from a reverse mortgage from using the program and benefiting from the financial independence it provides.
Kelly defends reverse mortgages by saying that “Flipping, equity skimming, unauthorized recipients, and poor annuity choices plague all loans.” He admits that seniors are the most susceptible group with it comes to making financial decisions but adds that
there are too many individuals in high places who do not understand reverse mortgages and refuse to expose their benefits, yet they trot out every single blue-haired lady who was stiffed of her hard-earned equity. No happy success stories here?
Look at the popularity of the reverse mortgage program. The way it has been portrayed – and communicated – all applicants stand to get swindled. Not so.