Consumer Reports: NCLC Report Supports Our Assessment of Reverse Mortgages

image Consumer Reports claims to be the expert on many things including reverse mortgages, especially after its unbalanced investigation into the product

Last week the company seemed proud when it wrote that its assessment of the risks and misleading marketing of the loans is supported by recent the “findings” in the National Consumer Law Center’s recent report.

Consumer Reports writes that:

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Many of the same players who fueled the subprime mortgage boom have migrated to the reverse mortgage market, which is viewed by lenders as a source of profits that have dried up elsewhere. Predators who once reaped their rewards from exotic loans are now focused on wresting wealth from vulnerable seniors, the report concludes.

“We’ve seen this movie before and it didn’t have a pretty ending,” said Sen. Claire McCaskill at a news conference announcing the release of the new report. “Abuses in the subprime lending market almost brought down our economy. Now we’re seeing similar abuses with reverse mortgage lending—something needs to be done before more lifesavings are depleted and more tax dollars are drained.” McCaskill plans to introduce new federal legislation to improve government oversight of reverse mortgages and further strengthen consumer protections.

Sadly, reforms will come too late to help Ernest Minor, a Marysville, Calif. senior who was featured in our story because he is facing foreclosure as a result of taking out a reverse mortgage. According to this local press account, Minor and his family are about to join the ranks of the homeless if they are evicted as they anticipate on Oct. 15.

Report: Reverse mortgages could be next financial fiasco

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  • Many people were overly encouraged by the NRMLA response to the last CR article. As an estate attorney told me: “Great article but far too late.”

    Well, I for one am glad to have the information needed to combat the examples in the CR article.

    It was not so encouraging to read the acknowledgements in the NCLC article, especially those from our own industry and ones like Bronwyn Belling and Ken Scholen.

  • BTW: You can post replies on the CR site. I answered some joker who advised selling the house and moving to a facility, a few hours ago.
    It did not appear yet, I'm under review.
    I would get some seniors with RMs to flood CR with their response to this callous attitude.

  • What are you complaining about? CR doesn't say reverse mortgages are a bad product, only that the same people who were selling consumers unsuitable mortgages a few years back are now moving into the reverse mortgage market as well. I'd think you folks would be in favor of getting the bad players out of action, rather than abusing the messenger. Or were you guys the ones telling fast food workers they could buy a house for no money down?

  • Once again I state: Where are the Wells Fargo, MetLife, and others of the stature of Bank Of America when comes to telling the FHA HECM (Yes I know: Reverse Mortgage) wholesome story of financially saving the lives of real live Seniors? As I have previously pointed out, the Life Insurance Industry
    does it for Life Insurance. The FHA HECM program enhances the lives of our CCountry's Seniors (I know– thanks to the limit raise I now have my own.),
    keeps Seniors in their homes with less financial pressure, and saves American Taxpayers money by keeping them out of a nursing home. This Industry must advertise to promote the success stories of actual FHA HECM customers.

  • I actually have the WMA file of the NCLC discussion, and it's interesting.

    One lady keeps talking about actually ENFORCING THE LAW and putting people in jail who commit fraud, and it's as if it goes in one ear and out the other with the other attendees. They all seem to to want make another form, lengthen the counseling, everything but prosecute the criminals. It's about an hour long.

    I have long maintained that crooks will be crooks, and those of us who love this industry have feared the incursion of the less-ethical into the business. They have always been there in a measure, but now there are so many.

    I am cancelling my subscription Consumer Reports. If anyone wants to WMA file of the NCLC discussion, I have saved it and will email out. Send a request to my personal email at: lindenlee22@comcast.net

  • Claire McCaskill knows nothing about seniors getting reverse mortgages and the good it does for them. She tells over and over again stories of alleged con people making these mortgages.She needs a course in reverse mortgages taught by an experienced loan originator. There is no cure for stupid.

  • How can you fight all this negative media?
    When I weent to a woman's home monday she had the Sun-Sentinel, a Ft. Lauderdale news paper, which pretty much paraphrased what is written above.

    Then when she got to the new TILA, which says her life expectancy is 11 more years, she went balistic, and refused to sign anything further. Evidently the fixed rate product has a new annuity table? She is 77.

    Between HUD cutting the benefit, eliminating non-FHA condos, Clair McCaskill, Consumer Reports, The Comptroller of the Currency; I sure I left out several others, it's time to find a different line of work.

    What a shame to kill an industry trying to help Senior!

  • The big problem CR had with reverse mortgages was not the product itself, but the fact some originators are selling it inappropriately. While it is true the vast majority of senior homeowners who have obtained a reverse mortgage are enjoying the benefits, it isn't necessarily the best solution for some.

    Despite government prohibitions against combining the sale of a reverse mortgage with an annuity, this practice remains the central business model for a number of origination companies, some of which are NRMLA members in good standing. This abuse puts all ethical originators and firms in a negative light.

    The examples cited by CU are not fabrications. They are true, although they might not be representative of the experience of the vast majority of reverse mortgage customers. But even one bad apple spoils the entire bushel. We must get rid of bad players, or we will see more negative press, along with increased government scrutiny and regulation that will result.

    • I'll bet that you have no real idea about the cross selling legislation and what is ok and what is not ok, when it's ok and when it's not ok. Unless you have read the McCaskill Amendment fully, you have no right to comment.

      And if you really know of lenders that abuse the practice, tell us who they are, include names and dates. Unless you stop the allegations or back them up with facts, you are part of the problem.

      It's not just bad players that we need to get rid of it's players that won't show themselves, can't or won't back up claims, and aren't willing to do anything themselves to make a positive impact and instead just whine.

  • The big problem CR had with reverse mortgages was not the product itself, but the fact some originators are selling it inappropriately. While it is true the vast majority of senior homeowners who have obtained a reverse mortgage are enjoying the benefits, it isn’t necessarily the best solution for some. rnrnDespite government prohibitions against combining the sale of a reverse mortgage with an annuity, this practice remains the central business model for a number of origination companies, some of which are NRMLA members in good standing. This abuse puts all ethical originators and firms in a negative light. rnrnThe examples cited by CU are not fabrications. They are true, although they might not be representative of the experience of the vast majority of reverse mortgage customers. But even one bad apple spoils the entire bushel. We must get rid of bad players, or we will see more negative press, along with increased government scrutiny and regulation that will result.

  • I’ll bet that you have no real idea about the cross selling legislation and what is ok and what is not ok, when it’s ok and when it’s not ok. Unless you have read the McCaskill Amendment fully, you have no right to comment.rnrnAnd if you really know of lenders that abuse the practice, tell us who they are, include names and dates. Unless you stop the allegations or back them up with facts, you are part of the problem.rnrnIt’s not just bad players that we need to get rid of it’s players that won’t show themselves, can’t or won’t back up claims, and aren’t willing to do anything themselves to make a positive impact and instead just whine.

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