Journalist Asks Everyone to Stop Labeling Reverse Mortgages as “Bad”

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.

Brian Montgomery

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.

Reverse mortgages shouldn’t be lumped into “bad” category

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  • Mr. Kelly is one of our strongest proponents but some of his comments would have been better left unsaid. Some might say that he is just saying the truth but sometimes speaking the truth without mentioning the number of occurences just places the emphasis on the wrong issues.

    Mr. Mongomery's comments were right on point. I am sure if he were free to say how he really feels, it would not be so well mannered.

    How strange it is that Democrats like Senator McCaskill are our most vocal opponents while our most ardent supporters and defenders are Republicans like Mr. Montgomery. Looking back to the FDR era, this is “the world turned upside down.”

    • Even though I am glad to have Tom Kelly speaking out in favor of reverse mortgages, I agree with the critic and jsmaldone that for every blue haired lady who has been trotted out by our critics there are hundreds more who have been helped, and that by not sharing those percentages or numbers, Kelly's statements may highlight the very thing he is disparaging.

      But I also am happy that Mr. Kelly is putting out Brian Montgomery's statement to OCC's John Dugan. John Dugan's comment was truly a case of an unwise, unfair statement made with no apology, just excuses. And because there was no apology made, damage has been done to a program that could help so many. I am only sorry that Mr. Montgomery is the “former” FHA commissioner. I can only hope the new commissioner is such a staunch defender of the HECM program.

  • Critic

    Makes very good points. I agree, Mr. Montgomery said it the way it is.

    I put forth a challenge to Senator McCaskill for a debate or question and answer session over a week ago, I still have not received a reply. She talks harshly about our industry but with no real hard facts to back up her statements. She does not understand what a Reverse Mortgage truly is.

    We continually receive bad press from those that know little to nothing about a Reverse Mortgage. They think they are protecting the little old lady with Blue Hair, they are not. On the contrary, they are taking away a lifeline for these seniors by putting fear into them. They are also trying to pass legislation that may make it impossible some day for a senior to obtain a Reverse Mortgage.

    Critic ended with a good statement. Looking back at the FDR era, this is “The World Turned Upside Down” !

    John A. Smaldone

  • Almost anything taken out of context or given in shorthand will mislead. Our financial and political leaders know precious little about the product. I think highly of Mr. Montgomery but wish he had been more emphatic.
    Very simply, the primary problems with the sub prime debacle were based on unsustainable equity growth and the repercussion of homeowner's being foreclosed upon when introductory rates expired resulting in unaffordable higher payments. Neither of these problems pertain to reverse mortgages.
    As for Sen. McCaskill, party affiliation aside, her opposition stems from the fact that her husband makes a lot of money from the nursing home industry. Sad but true.

  • Let's stop injecting politics into this very important issue. The legislation that created the HECM program was passed by an overwhelmingly bipartisan majority of a Congress (the 100th) in which both houses were controlled by the Democratic party and signed by President Reagan, a Republican. Neither party “owns” the HECM program.

    The vast majority of FHA reverse mortgages have made it possible for senior homeowners to live independently in their homes and enjoy their retirement years. Many articles over the years, including some that previously appeared in Consumer Reports, have been positive on reverse mortgages.

    There always has been some abuse of the reverse mortgage program by a small minority of opportunistic scam artists. Until a couple of years ago, positive stories outnumbered the bad ones because instances of abuse were rare.

    Now that many of the same scam artists who put Americans of all ages into subprime mortgages have abandoned that business and entered the reverse mortgage industry (and even have become members of NRMLA), it should be no surprise to see headlines saying reverse mortgages are the next subprime loans!

    Politicians react to what they see in the press as well as to constituent communication (i.e., lobbying). If we are unable to police our industry (and we haven't been very good at it thus far), the politicians will do it for us.

  • I would those that are so againist Reverse Mortgages go and speak to those that have done them. I can tell you that you will find they have felt it was the best thing they could of done and feel such a relief and independence of financial and personal burden. No, it is not for everyone, but it is one of the best options for one who wants to stay in their home for as long as they can. Talk to the ones that have them not the ones looking in from the outside.

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