Former GNMA CEO: Where is AARP?

201003051420.jpg Former Ginnie Mae Chief Executive Officer wrote an article in response to the Financial Crimes Enforcement Network’s decision to track reverse mortgage fraud.

Murin writes that:

Although I applaud FinCEN, the HUD Inspector General and all other law enforcement agencies who try and protect us from predatory practices, I am afraid statements such as these are not qualified, yet have some how still become the norm rather that the exception.

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Former FHA Commissioner Brian Montgomery commented by saying, “such statements that go without a challenge are downright destructive to the reverse mortgage industry.”

Murin writes that “qualifying these statements is not the sole responsibility of MBA and or NRMLA.” In addition he says:

I can think of others who claim to have the best interest of our seniors at heart who should take up a position to support law enforcement’s effort to protect seniors but who should also profess the benefits of the reverse mortgage program and the potential positive impact on our seniors.

Then he asks, where is AARP?

The industry would certainly benefit from AARP playing a bigger role in educating the public about reverse mortgages but its not clear if that will happen. AARP did voice its concern regarding the reduction in principal limits and perhaps its playing a more important role behind the scenes.

There was plenty of speculation that AARP would be forming some type of partnership with a reverse mortgage lender about a year ago and our sources it was close to a done deal. Everything seemed to be falling into place as NeighborWorks announced it would be taking over the Reverse Mortgage Education Project from AARP so it could “focus its efforts on consumer education”

With AARP no longer providing reverse mortgage counseling, many thought we would see some sort of reverse mortgage partnership announced but it hasn’t happened. Over the last year, talks of any sort of partnership have died down and we’re still waiting to see AARP “focus its efforts on consumer education”.

Reverse Mortgages Get Special Attention from Federal Investigators

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  • It sure is refreshing to see two reverse mortgage proponents that carry as much political weight as Joe Murin and Brian Montgomery speak out in favor of our industry.

    I don't know if NRMLA, or one of our larger lenders has engaged these two gentlemen, but regardless of the reasons, I feel great every time I hear or read their comments about the FHA HECM product.

    Thank you, thank you, thank you!

  • What AARP should do is get out of the Medicare Supplement Business, not get into the RM business. They are supposed to be an advocacy group, a lobbying group for seniors. If they got into RMs that would pose a huge conflict of interest. How could they go from policing the use of their name in marketing material at one extreme to becoming a player/lender at the other? I'd be surprised if regulators would welcome that.

    • Kevin,

      I don't think they would become a lender, it would be more of a marketing arrangement with a lender.

      Doesn't sound like its happening anytime soon though, so I wouldn't worry about it.

    • Kevin,

      For years AARP has been portrayed in the wrong light. Unlike NRMLA, AARP is not just one organization. It is a conglomerate of several entities. For example AARP declares itself to be a non-profit IRS qualified 501(c)(4) organization which had revenues in excess of $1.1 billion during 2008 and assets of almost $1 billion (after reduction for over $230 million in unrealized losses on their investments during that year) as of December 31, 2008. Then there is the AARP Foundation which declares itself to be an IRS qualified 501(c)(3) charity which had revenues of a little over 10% of those of AARP also during 2008 and assets totaling a little over $100 million. There are other AARP non-profits as well as for profit entities.

      Our “little industry” is only marginally attractive to the marketing revenue interests of AARP. Right now it seems they benefit more from being considered a neutral and unbiased source on reverse mortgages than they would if they endorsed or allowed any specific lender to advertise in their publications. As to their neutral and unbiased opinion on reverse mortgages, no doubt, many would opine otherwise.

      As to the AARP non-profit entities, Guidestar.org is a fairly decent source which supplies copies of the IRS Forms 990 of many non-profits online at no cost. Because IRS qualified non-profits must provide copies of certain information upon request, Guidestar.org is able to provide such information online for free.

      As to other sources of AARP revenues and profits, there are several articles on this subject. I am not aware of any reliable and verified sources that provide useful overall information about AARP. Information on their for profit activities is not available to the public.

  • During the 2009 MN Legislation session AARP was in support the reverse mortgage bill that would have negatively impacted seniors and the RM industry (remember all the dialog last year regarding MN SF 489?). Once the bill passed the House and Senate they sent out a message for their membership to contact Governor Pawlenty to sign the bill stating, “senior homeowners deserve to be protected from financial fraud that may lead to loss of equity or even foreclosure.” Fortunately the bill was vetoed by Governor Pawlenty. (If you recall, the bill would not have protected against “financial fraud.”)

    Besides supporting the bill they didn't even understand the facts of reverse mortgages and when I contacted them to try to educate them, at that time they were not interested in meeting to learn how the bill would have negatively impacted seniors and the reverse mortgage industry and to learn the facts.

    Additionally in the Star Tribune on July 16, 2009 Michelle Kimball posted an article titled, “Reverse mortgage veto poses risks/Legislation would have protected seniors” reiterating the support of the bill and demonstrating her lack of understanding the facts and current protections of the seniors.

    And AARP had/has the notorious statement that “the reverse mortgage should be a last resort.”

    As Joe Murin points out they were supportive at one point but haven't been supportive recently. The support of the MN bill did not show support of reverse mortgages nor that they are neutral and unbiased.

    • Beth,

      It was clear that AARP supported the Minnesota bill but what is strange is that AARP did not take any actively open position on the original and very similar California Assembly Bill 329 as proposed by Chairman Feuer. As you are aware our Republican Governor is far less conservative than yours.

      Exactly who supported the bill in Minnesota? Was it AARP nationally that supported it or just the Minnesota state segment? I have never understood why AARP did what they did in Minnesota but were far less proactive here in California.

      • James,
        During the MN legislative session last year when I talked with the local AARP I was told that their guidance to support the bill was coming from the national level. Yes, it is interesting they were so involved here in MN but not in CA.

  • I just threw away my letter from AARP that said I should get a Long Term Care Insurance policy from Genworth Financial – I get the same letter approximately every 2-3 months or so. And I receive similiar letters recommending the carriers they endorse for Life Insurance and Medicare supplements.

    In the not too distant future I expect to receive the same type of letter recommending AARP's preferred Reverse Mortgage partner.

    AARP used to be an advocate for the Senior, but now they're just a hugh marketing machine.

    • rainmand,

      With things in such flux, I doubt if any lender will want to take on a long-term contracts of this nature unless AARP makes it attractive. While the marketing related revenues at AARP may be low, I doubt if they are that low.

      You could be right as to 2013 or 2014 but I expect it will many months before you get that letter of RM endorsement.

  • I've received numerous membership solicitations from AARP over the past decade or so. Although the dues are modest, I've made the conscious decision not to join. While AARP does useful charitable work and acts as a voice for seniors, its advocacy efforts are tainted by its vast commercial interests.

    AARP acts as an advocate probably for most, but not all, seniors. It takes positions on pending legislation that impact seniors. I agree with many of its positions and disagree with some. Because of its diverse membership and commercial interests, it cannot take principled positions on controversial issues.

    Most of AARP's commercial interests involve marketing arrangements for insurance and other financial products for seniors. Some of these are a good deal; others are not. The AARP endorsement does not mean the product or service is the best or most affordable for a particular situation.

  • Wondering,

    I am not and never have been an employee of any AARP entity nor have I ever have received any direct or indirect compensation from them; however, I have belonged to AARP since my late 30's off and on. I have also volunteered in their tax preparation program. While understanding your distaste for their commercial activities, where do you find that most are wrapped up in their marketing arrangements?

    Sometimes we have a tendency to accept the derisive but unconfirmed statements of others without checking the facts. While it is true that AARP makes a very significant net profit from endorsements, advertising, and marketing arrangements, it is unclear how large of a segment those activities are within the AARP “empire.” That is one of the beauties of the American way of doing business; some things can be hidden just under the surface.

    The AARP conglomerate has been set up to avoid loss of the tax exempt and charitable status of several of its entities. Its entity structural arrangement makes it very opaque. Whether intended or not, that is another issue.

  • James,nDuring the MN legislative session last year when I talked with the local AARP I was told that their guidance to support the bill was coming from the national level. Yes, it is interesting they were so involved here in MN but not in CA.

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