Fighting Reverse Mortgage Attacks

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.

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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 nmorse@reversemortgagedaily.com

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  • Once again, we have an article that does not talk about the reverse mortgage product itself, but rather bad people steering seniors into other unsuitable products

      • I don't know. On the first page of their guide to reverse mortgages, it says this:

        “AARP does not endorse any reverse mortgage lender or product, but
        wants you to have the information you need to make an informed
        decision about these loans and other, less costly, alternatives.”

    • AARP, which ostensibly is a non-profit organization, has a for-profit subsidiary that endorses products and services — for a hefty fee. Most of these have been insurance policies. The AARP endorsement carries significant weight with senior and should not be taken lightly. I believe it is only a matter of time before AARP endorses a reverse mortgage company. The organization's exit from counseling, as well as its absence from this year's NRMLA agenda, point to that possibility. In addition to its endorsement fee, AARP probably will ask its partner (or partners) to be competitive in pricing and abide by some agreed-upon rules.

  • RM researcher,

    Your statement that AARP no longer endorses reverse mortgages is misleading and under-informed. They never have endorsed any reverse mortgage lender or product.

    • AARP understands the value of its endorsements especially as to other products. Is the reason for their lack of endorsement because no lender can justify the cost? If not, what is it or does anyone outside of AARP know for sure?

  • AARP — its all about the money or the potential for money that come from its endosement. I would bet on Snoopy as well. There is to much money for AARP to make for them to stay out of it for long.

  • When addressing negative press such as the misleading Parade article, I tell my prospective borrowers not to “beware of reverse mortgages, but, to beware of reverse mortgage companies and practices.”

  • Ever notice there is not a single ad for reverse mortgages in the AARP monthly “Bulletin” to their members? Can't believe no lender has tried to place an ad there…

  • I have not renewed my membership to AARP for some time; since I realized they are NOT an advocate for seniors. It (AARP)will be rolling out the RM product eventually–they will have the only “safe” reverse product for seniors and the only “honorable” loan officers originating them.

    • AARP has been sending me membership solicitations and “temporary” membership cards regularly over the past 11 years. Although I agree with much of its legislative agenda, I have refused to join AARP because of its for-profit endorsement activities. I am particularly annoyed at AARP for having influenced Congress to restrict our origination fee income, rather than let the marketplace decide what we will charge.

      • Oh the marketplace is still deciding what we can charge. What AARP did was cap what the marketplace can decide to pay us.

  • I looked in my recycle bin for last Sunday's Parade mag. 11/15/09. I did not see any rm article. What week was it in? Perhaps it was regional.
    Don't you people remember the TV show that AARP did with Barney Frank about 2 weeks ago. I thought it was very positive. AARP is also giving the HECM counsellors test. Why would they do these things if they were against rm's?
    <Ahref=”http://www.fhareversemortgagesofsouthflorida.com>reversemortgagessouthfloridaFHAhud

  • I looked in my recycle bin for last Sunday’s Parade mag. 11/15/09. I did not see any rm article. What week was it in? Perhaps it was regional.rnDon’t you people remember the TV show that AARP did with Barney Frank about 2 weeks ago. I thought it was very positive. AARP is also giving the HECM counsellors test. Why would they do these things if they were against rm’s? rnreversemortgagessouthfloridaFHAhud

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