Larry Tiffan is concerned. The reverse mortgage consultant from Scottsdale, Arizona wonders why the program he sees helping so many senior clients can be causing problems for its backers and drawing bitter attacks from public officials.
Tiffan, who works under the aegis of Traditional Home Mortgage, says the math doesn’t add up. “If the average life of a reverse mortgage is seven years, how could the government insurance fund be losing money?” He speculates that the HECM program “now in its 20th year, had an insurance fund commingled with other risky programs,” notably subprime that “ate up all its surpluses and then some.” Why, he wonders, “are they now asking reverse mortgages to pay [the resulting] projected deficits in the next fiscal year.”
Added to these woes, notes Tiffan, are criticisms from public officials who are unfairly taking aim at reverse mortgages. “They have chosen a few isolated and awful war stories of how seniors have been hurt by unscrupulous people.” It has produced “negative images among reverse mortgage people that we’re battling everyday. There is more adverse publicity and it’s getting worse.” Rarely do the media draw attention to the extraordinary high level of customer satisfaction of those having a reverse mortgage as compared to other loan products.”
Further, he says, the “downturn in property valuations” nationwide has made it harder to look at the amortization schedule and say “probably at the 15th year there is risk of a loss.” Tiffan predicts a “new phase for the reverse mortgage business in which seniors will work with lenders to reduce the balances on their first mortgages proportionate to the appraised value.” This action, he concludes, might then make refinancing to a reverse mortgage a viable option for many seniors.
Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade, currently specializing in the reverse mortgage sector. He can be reached at firstname.lastname@example.org