CNN Airs Reverse Mortgage Segment

Over the weekend CNN’s Betty Nguyen talked with Clyde Anderson, who is part of the CNN Money staff about reverse mortgages.  The segment is very positive but the information given wasn’t necessarily the best.

During the segment, Nguyen says that, “It’s almost like its interest free”, and Anderson says “exactly”.  Definitely, not the case.

I’ve got one request for the mainstream media, please find someone who can explain reverse mortgages without reading from a piece of paper in their hand during the segment.  At the very least give them a teleprompter.  Don’t worry CNN, CNBC did it too.

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  • Some take the position that if the product, the originators, or the lenders do not come under fire, any TV segment is a good segment. For marketing purposes a lot of times that is very true. HOWEVER, it would just be nice when someone is reading off of a sheet of paper, they would be reading something that really had to do with a reverse mortgage.

    So by watching this segment, I learned I cannot owe much on my home but if my home is worth $200,000, because I will only get monthly payments, I will get about that much out over time. I also heard fees are piled up at the back end of the loan. Wow, now I know it is recourse debt because my heirs or I will have to pay it back. I also learned reverse mortgages eat up equity (is that also true if I pay money in?).

    They are nice people, looked sharp, had great voices, but as the saying goes “a little knowledge is a dangerous….”

  • I help 'seniors' do reverses every day and I can tell you that if half of what this guy said on CNN was true, the vast majority of my clients would not want to do that and I would encourage them not to. The program really can help folks in need and some who are not. They must have the program explained in a way that clearly enables them to make the best decision for them. I will admit to telling some of my folks that this program is not or cannot be for them, but the vast majority are extremely happy when we are able to salvage their homes and generally improve their quality of living.

  • A great story but there are multiple problems with this presentation: 1) It is a home equity line of credit; 2) The borrower does not need to home the home “free and clear.” Most of the borrowers that we work with have existing mortgages of significant amounts on their homes when they take out a reverse mortgage; 3) It is no way “like an interest free loan.”

    • Mr. Smith,

      Not all HECMs are HELOCs. We have closed-end HECMs; they're fixed rate.

      A lot of people mistake free of monthly payments with “like an interest free loan.”

      • You are correct. We too offer fixed-rate HECMs, which are not legally HELOCs.

        People may mistake no payments with interest free, but that is a huge mistake.

  • It would be interesting to note how many lenders even bother with variable rates anymore since those in power got to mismanaging the margins to the point that the only real choice left for potential borrowers or lenders too for that matter is the fixed rate and it just killed the open competition among lenders. It is a shame that the very people for whom this program was created are having to suffer for the sins of those who are to provide the service.

  • A great story but there are multiple problems with this presentation: 1) Unless it is a fixed-rate reverse mortgage, it is a home equity line of credit; 2) The borrower does not need to own the home “free and clear. Most of the borrowers that we work with have existing mortgages of significant amounts on their homes when they take out a reverse mortgage; 3) It is no way “like an interest free loan.”

      • Ok, it was a bad report, but if I were selling RMs, I would now educate the prospect and joke about poor reporting. Practically every one, seniors and heirs, can remember an erroneous or slanted story. If they can, then they are on my side of the table. Let any objections come on now. Of course, this is hypothetical, since a prospect may not bring up this article at all. “What have you heard about RMs?” I would ask, hoping they bring up CR or the like so I can knock out any misconceptions.
        My point is that without guys like James Garner running around these days, some people may not be aware that this great tool is out there; I like publicity.

      • dduck12,

        Very few prospects bring up stories like this; if stories are brought up, they are generally very negative.

        I have yet to meet one single prospect who brings up James Garner or Pat Boone on their own; most of the time if I bring up their names, they remember. If anyone is brought up by the prospect it's Robert Wagner.

        Usually the actors listed above do the best job because the advertisers provide good script writers who learn or know the product and one thing these actors do and do well is deliver their lines.

        However, I also believe the old saying with a twist: “no publicity is the worst publicity.” The sad thing about the CNN segment is that with a little work, it could have been a great segment. It would be great if an experienced originator sat down with the financial guy and showed him what a HECM is really all about. Neither of these reporters nor CNN appear to be biased against HECMs.

      • Sorry for belaboring the point. We generally agree: “just spell my name right”.
        With reluctant prospects, or negative ones, I meant to actually solicit things like Robert Wagner ( I couldn't remember his name, but the impression was there) and even the sloppily written stuff like CR and CNN, and use them as “strawmen”. Get any objections out in the open and answer them, I feel.
        Have a nice weekend and I wont belabor on Labor Day any more.

      • dduck12,

        Thanks for the response. I'm here on the West Coast and am not always aware of what happens in places like “the Big Apple.” It could be that in some parts of the country, the prominent ads were with James Garner rather than Robert Wagner.

        Getting negative things out in the open is a great technique. Many times it really helps.

        Not long ago, a couple who live near the Will Rogers Ranch in LA came into my office. I had talked with the husband for a few minutes one day before that and then he told me he and his wife were coming to my office for an appointment. When they arrived, I could tell all the wife wanted to do was leave.

        After the husband introduced them and told me a little about their situation, he turned it over to his wife. She promptly put an article in front of me on reverse mortgages. Of course it was primarily a negative anecdote. It was also very well written with some clear and positive reasons for seniors to look for other sources of financing. Fortunately that morning I had read the same story in RMD. As we sat there I first pointed out the positive reasons not to get a HECM and then refuted the wrong ones. At the end, she smiled and told me: “I don’t know why but now I trust you. Honey, I hope you brought your pen, we are getting the reverse mortgage from this gentleman.” She had not come prepared to stay so the drive to our office plus the meeting was wearing on her but she (and he) is very happy with what their HECM is doing for them.

        Your points are well taken. Enjoy the holiday.

  • To ImDave,
    I would hope you and all lenders offer the variable rate reverse mortgage! I have not heard of lenders not offering it? The fixed rate it not for all? What if a client has a home paid in full and doesn’t want the lump sum as a fixed rate would require? You are just putting all of your clients in fixed rates? If so, we are going to have many more terrible stories because the fixed rate is not for everyone!

  • The quality of this segment was awful! This guy hasn't much of a clue about Reverse Mortgages. Why isn't FHA doing PSAs?

    I'm quoting adjustable rates to people who do not need all the money now. It's the clients, stupid, not you.

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