Stuck In Reverse? HousingWire’s Take on Reverse Mortgages

housingwire_logo_partnerThese days it’s pretty rare to come across a balanced article on reverse mortgages but Housing Wire’s Kelly Curan does a great job describing the state of the industry and the challenges it faces.

Instead of re-hashing the story here, HousingWire was happy to provide RMD readers with access to the article which is only available to its magazine subscribers.  Below is the first couple paragraphs but be sure to read the rest of the article here.

Amid the ailing economy, Americans of all ages are finding themselves strapped for cash, forced to realign financial plans —some are even dipping into retirement funds. Older Americans may face more crucial decisions than younger generations, however, as they typically have less time to recover should they make any unintended financial blunders.

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For this very reason, financial products that have the potential to rearrange a senior’s finances or change their source of cash flow are never without a fair share of coaches… and critics. And reverse mortgages are certainly one of those products.

Despite having been in existence for over twenty years, the reverse mortgage product has rallied increasing hype across the nation recently. Some brokers of these types of mortgages say this product is a necessary step to increase borrower cash flow in retirement or to avoid financial troubles, while some asset managers and others voice concerns—one of those concerns being predatory lenders who prey on senior citizens, using reverse mortgages as bait.

Nonetheless, a growing number of older Americans are securing reverse mortgages according to Home Equity Conversion Mortgage (HECM) data recently released by the U.S Department of Housing and Urban Development (HUD).

Wells Fargo witnessed a spike in activity as well. And “we believe there are three primary reasons for the growth,” says Tim McDonald, head of the Reverse Retail team at Wells Fargo Home Mortgage. There is a greater awareness, understanding and acceptance of the product by seniors and those who advise them, says McDonald—although, not all professionals agree.

And there’s an aging population that can benefit from such a product as it does its best to navigate the tough economy. There has also been a broad-based effort of recent to educate and promote the advantages of a reverse mortgage, he says.

And that education is absolutely necessary says David Bancroft, president of Omni Reverse, who believes there’s an “incredible” amount of education that’s still needed, even for housing and financial industry professionals.  “It’s human nature. If you don’t understand something, you fear it,” Bancroft says. “And if you fear it, you put a negative connotation to it.” When in fact, Bancroft says the satisfaction rate for Americans who opt into a reverse mortgage is through the roof, sitting near 92%.

On a side note, if your looking for someone to keep you up to date on what’s happening in the “forward” world, you need to read Housingwire.

Stuck in Reverse

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  • With a title of “Stuck in Reverse” and a subtitle of “Lenders gear up to take seniors for a ride,” my first and lasting impression is this article is not all that positive, fair, balanced, or unbiased.

    It seems as if the avalanche of bad press has taken its toll. Whenever criticism is made of a less negative article than the recent CR article, more and more commentators are using adjectives like “picky” to describe criticisms. We need to hold reporters to the highest standards but too often at least recently that will is dissipating.

    While the author quotes industry leaders it seems as if the author gives them a set of questions at times not at all connected to the criticisms the author raises. If the financial criticisms against reverse mortgages had been presented to Mr. Bancroft, for example, he would have addressed them and done a good job answering them. As it is Mr. Bancroft is made to look like the best he can do is offer an emotional response about “peace of mind.”

    While applauding the author for finding responsible members of the industry to quote and using some excellent quotations, it is troubling that the author failed to allow these individuals to address many of the negative issues the author cites. If the author had done that, the article would have been positive, balanced and perhaps even unbiased and fair.

  • It's a sad commentary when articles like the WSJ one and this article have misleading titles. The WSJ one was really a title company fraud story and they stuffed it like a sausage with RM anecdotes. This story, which is kind of balanced and fair has a title that sounds like an expose of RM misdeeds.
    Is this a case of editors grafting juicy, but erroneous, headlines on benign articles, or are the authors not too swift or trying to be deceptive? Something is not right, maybe that's the new journalism 101.

  • It’s a sad commentary when articles like the WSJ one and this article have misleading titles. The WSJ one was really a title company fraud story and they stuffed it like a sausage with RM anecdotes. This story, which is kind of balanced and fair has a title that sounds like an expose of RM misdeeds.rnIs this a case of editors grafting juicy, but erroneous, headlines on benign articles, or are the authors not too swift or trying to be deceptive? Something is not right, maybe that’s the new journalism 101.

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