Reverse Mortgage: Trick Or Treat?

Leave it to a witty journalist to get creative around Halloween by writing a story like Trick or treat: Reverse mortgages can be foreclosures in disguise.

TampaBay.com writer James Thorne writes that:

Right in time for Halloween comes a topic right out of the ghoul’s guide to mortgage lending: Reverse mortgages, which a growing number of Tampa Bay homeowners consider to be little better than foreclosures in disguise.

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He writes about one couple who says that Robert Wagner is no longer their favorite celebrity pitch man, now that they have tapped tens of thousands of dollars to repair the roof and hook into city water from their reverse mortgage.

But it sounds like they’re more upset with their drop in home values (who isn’t?) but decide to blame Robert Wagner:

If real estate values had continued to rise, or even flattened, the Rushes wouldn’t curse their decision. But few reverse mortgage holders counted on the market meltdown.

What’s really frustrating is the last line:

Before you rush into a reverse mortgage let Melly Rush’s word echo through your cranium: “We don’t own our home anymore.”

After reading an article like this, it just makes me realize that we have such a LONG way to go on educating the public on reverse mortgages.

Trick or treat: Reverse mortgages can be "foreclosures in disguise"

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  • People sure do have a strange idea about not owning their house anymore. Even if the debt is upside down, what is the value to a homeowner of living in their home for as long as they choose or live or their health permits, expecially one that is now fixed up? Who is their landlord? I guess these things have no value.

    I wonder what their situation was before the proceeds from their RM were taken. Home values drop and some borrowers have remorse. Irresponsible journalists take an problem and try to expand it to a whole population with little or no verification of the extent of the problem.

  • Rather than commenting to our own audience here, why don't folks sit down and write a letter to the editor of the Tampa newspaper. Nice, polite letters pointing out that a reporter was incorrect and misreported on a topic go a long way to helping address the issue. They might not print a retraction immediately, but they will definitely question the reporter's info and sources the next time he or she writes on the particular topic.

  • I wrote a letter to the editors, as well as Mr. Thorner. To use a synonym to Mr. Thorner's phrase, the article could aptly be titled, Ghoul’s Guide of Misinformation. I am distressed to read a piece that so blatantly projects a reverse mortgage negatively and biased. Unless Mr. Thorner works with seniors on a daily basis, goes into their homes and knows their individual circumstance, he cannot possibly understand what a reverse mortgage can do. He certainly has no understanding of the program.

    He referenced two individuals that apparently now have regrets. I noted that one was a friend. So he used this forum to publicize his friend’s situation without regard to the majority of seniors that are thankful for the opportunities their reverse mortgage provided.

    Today’s seniors face many pitfalls in retirement, loss of a spouse, loss of income from that spouse, rising costs and a 433% increase of the bankruptcy rate for those age 75 to 84. The comforts of their home can be a cherished security that gives them peace of mind. It is not for this journalist to pass judgment on those that have a need or desire to utilize a government insured program to assist them in their retirement.

    I concur, everyone needs to write to the St. Petersburg Times and set the record straight. Jack Kemp, former US Housing Secretary, said it well, “A reverse mortgage is part of a comprehensive plan structured to allow seniors to live in their homes for as long as they so desire, in as comfortable a circumstance as possible.” The readers of the St. Petersburg Times deserve to understand this.

    • Ms. Moore,

      I read the article and your reply. I believe that what Mr. Bell is referring to is a letter to editor, not a comment or response to the journalist. If you wrote the editors, what did you write?

      I for one was taken back at least one of your comments to the journalist. I have no earthly idea why you are so proud about never taking any spouse off of title. Not every case is one in which waiting is appropriate.

      For instance, I had a senior whose husband was 60 and she, 62. He was disabled and her salary was insufficient to pay their bills. He was to receive a handsome court award that would not begin for about 18 months. He could cash in some of that award but the discount was alarming. Instead he and his wife looked at reverse mortgages.

      This was over three years ago and the couple approached me because they saw I did something they had not heard of, a proprietary reverse mortgage. They desperately needed to get rid of their mortgage payment to save their house. It was the home also for a few displaced grandchildren. To have lost the house would have been a family catastrophe. They also used the remainder of the reverse mortgage proceeds to pay off pressing bills. Even though they rightly felt uncomfortable taking him off of title, they were (and are very) happy that they did.

      The couple only wanted the reverse mortgage until the award payments started; it was an annuity. The total costs were low compared to a HECM, and the other costs of the proprietary reverse mortgage were very favorable to cashing out a part of the award.

      Everything worked out as planned. The couple paid off the reverse mortgage with a new forward mortgage. With the award payments, they will be able to pay off the forward mortgage in less than fifteen years (maybe less than ten depending on the needs of their grandchildren). If the husband passes away before then, the award also includes life insurance that will give the wife more than enough money to pay off the forward mortgage. They also understand that they can get another reverse mortgage in the future.

  • I wrote the letter below to the 7 Managing Editors of the St. Pete Times. The author of the article has already responded to me and we are meeting later this week. Believe me, I will set the record staright….

    Ladies & Gentlemen,

    I am contacting the entire St. Pete Times Editorial Board in reference to an article that appeared in today’s edition regarding Reverse Mortgages written by James Thorner.

    I have already e-mailed Mr. Thorner directly.

    The subject of reverse mortgages has certainly gotten much national attention as of late. And of course, everyone is entitled to their opinion…

    But with all due respect this articles examples and conclusions are so misguided that a huge disservice was just portrayed on the Seniors that read your publication.

    My name is Michael Banner and I am the Founder of LoanWell America, Inc., in Clearwater Florida.

    LoanWell has been in the reverse mortgage industry for 4 years and has helped so many seniors maintain, or in many cases, increase the quality of their lives with this product.

    I am one of very few individuals in the Country that is accredited to teach Certified Financial Planners about the uses of the reverse mortgages. I am approved by the Florida Bar to teach the same course to attorneys. I have appeared in the Wall Street Journal, Tampa Bay Business Journal the Fox Business Network and publish articles on this subject in The Reverse Review.

    If I may, all television, radio and news publications are dealing with so many crisis’s that are plaguing this great Country right now. The energy crisis, the Mid-East crisis, the Health Care crisis and the Wall Street Crisis which of course has now turned to the Main Street Crisis…

    There is one terrible crisis that no one seems to want to deal with, the crisis our Seniors are now facing.

    The historical turbulent financial environment this Country is now facing is having a devastating effect on this nation’s greatest asset. Our Seniors! Our mothers and fathers, our grandmothers and grandfathers and those aunts and uncles you only see on holidays… Their hurting…the crisis’s mentioned above are overwhelming to those on a fixed income…

    The National Council On Aging (NCOA) has stated more than 13 million Americans can use a reverse mortgage to pay for long term care.
    http://www.ncoa.org/content.cfm?sectionid=250

    Met Life concurs that this powerful product can help millions remain in their home and afford long term care.
    http://www.metlife.com/about/press-room/index.h

    I refer you to a study entitled Use Your Home to Stay At Home also created by the NCOA that states the reverse mortgage can add years to people’s lives by allowing them to stay at home longer…
    https://www.ncoa.org/Downloads/ReverseMortgageR

    How about you use the power of this great publication to address this crisis?

    The St. Pete Times is a giant and it’s home happens to be the state where most seniors dream of retiring… Florida.

    One of you on this list, take the chance, let’s make a statement on this most serious of problems that is affecting this Country’s greatest asset, our Seniors!

    What say you?

    Respectfully,

    Michael L. Banner
    Founder
    LoanWell America, Inc.

  • Have just written an email to the author as I don't have an account to comment through the newspaper. It is so sad the public view of this article is most likely negative when he could have pushed that the product was not at fault but their use of it. Anyway, here are my comments to him:

    Was just provided with a copy of your article and I am very concerned about the “instant message” most people would take away from your article. Although you did make comments indicating the fault is not entirely with the Reverse Mortgage product, the comments are not as memorable as the quotes by the people who were interviewed.

    I have been in the mortgage business since 1977 and have arranged for reverse mortgages since 1994. I feel so strongly about the fact they help seniors and are a financial tool that people should be educated about and like some of the investment products people use that I now specialize in reverse mortgages. Once educated so they can make a solid decision about what is best for them, seniors can proceed.

    Having said that, shame on the Rush's for blaming the outcome of their “feeling flush” spending on someone other than themselves. Making necessary repairs is practical, I can only hope they didn't use that excuse to over re-model. I am sorry they had to experience this housing market crash, but, then again, they have a mortgage that is frozen at a point that probably allowed them maximum return of their equity position. How fortunate they are compared to those who had the regular “forward” credit lines that the banks took upon themselves to reduce so homeowners were left with monthly payments and no equity left to draw from.

    Then again, shame on you for not pointing out more strongly that the Reverse Mortgage product was not the culprit here. Your scary article may keep many homeowners from looking into a mortgage that could be the only thing keeping them from truly being homeless. If the Rush's did not own their home at this point, they would be paying rent to someone even if it were Bank of America. They should be grateful they have the opportunity to have a roof over their head without worrying about shelling out real money every month for the rest of their lives. As to the flood insurance, tell them to go to their insurance commissioner if their insurance company cannot provide a clear answer as to their being in a flood zone or not that the lender will accept. People are so quick to blame whoever is the biggest target for their own lack of proper research and decision making. The housing crash is bad enough and we have to deal with it as best we can, but our own prudence is our best ally.

    Please do yourself and your readers a favor and publish an equally attention getting article about all the stories we can provide about a reverse mortgage keeping someone from foreclosure, bankruptcy or just giving up. I am attaching a couple (from RMD) you may like to use, but believe me, anyone in this industry has at least one story that has not been publicized yet. The biggest issue I face today is finding lenders who will accept a reverse mortgage payoff for their “upside down” situation rather than forcing seniors to sell their homes instead, thereby putting more distress sales on the market to continue to fuel the housing crash. If lenders accepted the situation as sad but unavoidable, they would do everything possible to keep people of all ages in their homes if they are willing to continue some kind of payment or make a substantial payoff. The attached article about a Bank of America loan is an example of what should be done if at all possible. The only problem I have is they waited until they were contacted by a third party negotiator and then said in effect, “Oh, we were going to do that already.” Yeah, well, just do it then, lenders!

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