Like the prize-fighter hit with yet another haymaker, the reverse mortgage industry awoke one Sunday morning last month to a scathing story about the perils of reverse mortgages. What made this “punch” sting just a bit more was the arena: “Parade Magazine,” read by more than 72 million Americans, half of whom are over 55, according to independent audit statistics.
Running under the none-too-subtle headline: “Beware of Reverse Mortgages,” the story, accompanied by a photograph of a clearly dismayed senior couple reading what appears to be a worrisome letter, refers to a “host of unscrupulous loan officers, mortgage companies and loan counselors defrauding desperate Americans.”
What comes to mind is the famous Tylenol scare, says long-time industry figure Jeffrey Taylor, formerly of Wendover Consulting, Inc., now chairman of Reverse Market Insight Inc. He is referencing the 1982 Chicago incident in which seven people died – later ruled homicides – after taking Tylenol pain-relief capsules that had been poisoned. Still unsolved, those murders, and the massive media coverage that followed, drove Tylenol’s market share down, nearly overnight, from 35 percent to 8 percent.
However, sales rebounded in less than a year, after the product’s maker, Johnson and Johnson, launched an aggressive counter-attack. A month after the murders, according to Wikipedia, “the company reintroduced the capsules in a new, triple-sealed package, coupled with heavy price promotions, and within several years Tylenol had rebounded to become the most popular over-the-counter analgesic in the U.S.”
Taylor says the reverse mortgage sector has to fight back in an equally strong way, emphasizing that “this is a government-regulated program. We should stand on that,” he declares. “If it wasn’t acceptable, the government wouldn’t insure it.”
Neil J. Morse has been a communications professional working in the mortgage finance industry for more than a decade. He can be reached at email@example.com