Lender Calls Out MSNBC for Misleading Reverse Mortgage Reporting

NewImage.jpgI’m sure the majority of RMD readers saw MSNBC’s “Consumer Man” terrible article on reverse mortgages.

MSNBC’s Herb Weisbaum wrote that consumer advocates believe the country is headed toward another mortgage meltdown in the reverse mortgage industry. “Many of the players from the subprime disaster have now moved into the reverse mortgage market,” he says.

Referencing the National Consumer Law Center’s Subprime Revisited report, NCLC attorney Tara Twomey told MSNBC the problems in the reverse mortgage industry are “eerily similar” to those that drove the subprime boom and led to its bust.

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It’s one of the most one sided articles we’ve seen in some time but Michael Branson, CEO of All Reverse Mortgage Company fires back with an incredibly well written response.  Branson goes line by line through the article and points out the inaccuracies of the reporting.

Specifically about how the numbers used in the article do not add up.  Well worth the read.

Reverse Mortgages: MSNBC ‘Consumer Man’ Gets It Wrong Says Industry Leader

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  • Thank you Mr. Branson, for speaking out so eloquently in defense of those of us in the reverse mortgage industry. I was shocked and appalled when I read that drivel published on msnbc.com, but was thrilled when I read your response. My only hope is that your outstanding response gets as much “play” as the horrific article by Mr. Weisbaum.

    My only question is, where the heck is NRMLA and why must we rely on members like Mr. Branson to defend us from such malicious attacks?

    Thankfully, we have some members who choose to not sit idly by while we are ridiculed, but the fact remains that this type of response should come from our Association.

    • reversemaniac,

      I strongly disagree. The rebuttal meandered and was far too wordy. I am too wordy.

      I wish you had been asked to help write it. It would have been far stronger, shorter, better written, and would have had the needed bite.

      Dennis Haber is right; we need a team of good writers who will work together to respond to the nonsense that some of our alleged critics write.

      • Thank you for your kind comments/compliments; they are always appreciated.

  • I applaud Michael Branson for correctly determining that a rebuttal needed to be written in response to the MSNBC.com article by Herb Weisbaum. His rebuttal, however, is in reality little more than an imprecise and meandering article that saves its punch until most readers would have stopped reading or gone to sleep.

    After spending a paragraph telling us about his feelings and reaction, Michael finally attacks the first part of the MSNBC.com article by declaring: “He seems to believe that they are growing in popularity and the growth of the reverse mortgages between the years of 2005 and 2008 can be directly attributable to actors like Henry Winkler and television commercials for the product.” Why he dedicates so much space in the very first part of his rebuttal in attacking Herb over what Herb “seems to believe” is difficult to understand.

    Herb actually makes a valid point in the first part of his story when he says: “Today, they’re marketed as a way for homeowners 62 or older to crack open a giant piggy bank.” Michael completely ignores this declaration.

    Michael then spends six long paragraphs describing the plight of and difficulties for seniors in obtaining forward mortgages with an emphasis on HELOCs (odd since it has little to do with the article itself). But fear not; Michael turns his attention back to the article in his next 22 long paragraphs.

    Michael finally comes to one of the most egregious parts of the article but starts off by naming the Hickersons “Mr. and Mrs . Hickerman” (extra space and spelling). Apparently Michael did a lot of good homework which helped clarify some issues in the example to those who are familiar with HECMs but failed to provide things like the age of the youngest borrower at the time of origination, the expected interest rate, or the monthly servicing fee.

    Herb obviously makes a terrible mistake by stating the upfront fees on this loan were $25,000. Michael jumped on this point and correctly stated that actual upfront costs were probably $10,000 less. However, Michael did not point out that there is a common reduction to the principal limit in that era called the servicing fee set aside (“SFSA”) that could have made up that difference if the expected rate was 2.7% or lower, the youngest borrower was 62, and the monthly servicing fee was $35. The point is not discussing the SFSA leaves a huge hole in the $25,000 “fee” controversy.

    After wasting unnecessary space with guesses about what the balance due was in the Hickerson case, Michael gets to one of the most outrageous charges in the entire article, “the loans ‘are designed to wipe you out.’” But this is buried near the end of a section of some fourteen long paragraphs. Rather than rigorously attacking this outright lie, he writes one sentence in rebuttal moving on to showing that he can dispute how Mrs. Banks could not owe $272,000 at the end of five years if all they borrowed was $38,000. He then says how he never would have advised a couple to take the younger spouse off of title unless it was absolutely necessary. Finally Michael disputes the need for more regulation and adds a caveat about reverse mortgages not being for all seniors.

    With a rebuttal well over 2,400 words long refuting an article of less than 1,200, Michael would have been wiser to have collaborated with others to make a shorter and stronger rebuttal but the price would have been sharing the limelight with others. Even this meager attempt of critiquing the rebuttal is 607 words and no doubt could have been shorter.

    • And yet another useless critique from The_Critic. I know you feel somehow morally superior as you sit and write your smug comments constantly and I wish I had the time you have to sit on the blogs all day. Must make you feel great that you are so much better than all the people you constantly try to belittle with your worldly reviews, but just once I'd like to see you be out there in the forefront of some of these issues taking on the injustice instead of sitting back looking for a way to tear apart someone else's thoughts. Or maybe I missed your comments or article that day, hmmmm.

      Your “meager attempt” as you put it, at 607 words to rebut would be much better utilized if you would spend your time with original thoughts looking for ways to help the industry instead of looking for ways to constantly rip at those who do. As a reverse mortgage professional, we can debate whether you felt Mr. Branson hit all the points we would all like him to or not, and whether his literary skills are up to your obviously superior specifications or not, but I for one am glad that SOMEONE is speaking out in our defense when others remain silent.

      I also think you tell much about yourself in your critique. I can't speak for the author, but I would guess that since this article was not even written for RMD but was placed on their website (I actually checked), that he didn't consider “sharing the limelight with others” as you put it due to the fact that articles written for one company's private website are not typically collaborative works. It appears that you do not understand this and write like an individual who works for an institution or “association”, not a private company. I'd love to see some original thoughts from you just once and then we'll all sit around and critique your thoughts but in the mean time, since you're always reactive and never proactive, I for one prefer the article to your critique.

      • ReversePro,

        I guess you did not read my first sentence. I applaud Mr. Branson for recognizing something needed to be done. Many in our industry do not recognize that fact. I am far less enthusiastic about what Michael posted. What is so wrong with that?

        I guess you have never heard of proof readers, ghost writers, or editors. Most articles are rarely the work of just one person which the article by Michael clearly appears to be. Amateur writers — like me and maybe you — are well advised to find collaborators. Other than comments there is rarely anything I write that is not reviewed by others — and write I do.

        I know you have little place for critics. You are not by yourself. But rather than criticizing a critic (a critique in itself) why not write that innovative idea yourself.

        Your writing is almost biting enough that you should try your hand at rebutting someone. It is interesting that you are protecting Michael since a rebuttal is little more than a critique by another name. You clearly feel his object needs to be criticized, an interesting position for one who is so put off by critics.

        You might not like seeing members of your own industry criticized for what they say but praise for a poorly written article only makes our industry look worse to those who understand what it is we do. I am sure Vice President Biden does not enjoy reading the critiques of those who believe the Obama Administration is heading the wrong direction especially when written by fellow Democrats but such things must be said; certainly Vice President Cheney was and is no different when it came or comes to the Bush Administration and criticism from fellow Republicans. The critiques of our own always cut the worst.

        Good luck, in “putting your hand to the quilt and well” and putting those innovative ideas in print. I encourage and admonish you to write. Our industry needs the cream to rise to the top. I am but a meager writer asking for others to drown me out with their brilliance. My critics will join in on that chorus but why don’t they write?

        Even though I have sparred with a much better writer, reversemaniac, I love to read what he writes. That does not mean we always agree but he is bright, literate, articulate, and well versed. He rarely engages in topics he is not strong on and many times his words BITE. I would love to see him on the attack against our detractors (dah, dah — an original idea or at least suggestion). He is a very good writer, at least, in my eyes.

  • The_Critic, while correct in his assessment of Mr. Branson's response, seems to have replicated the same error by posting an 8 paragraph long rebuttal.

  • Holy crap!!! Mr Critic's comment is almost as long as Mr Branson's article! Why didn't Mr Critic rebut the article with all that energy?

  • As usual, “The Critic” is self-absorbed and needs to see his name in lights. I agree with the comment that “The Critic” seems to spend too much time throwing barbs at we who comment from time to time and no time helping the industry defend against idiots like MSNBC.

    So where was NRMLA during this controversy? I thought they hired a famous PR firm to respond to this drivel.

    • Bill,

      My name is not “The_Critic”. You say I want my name in lights while others complain that I do not use my name.

      You do not even mention Mr. Branson, his efforts, his reponse, or the critique. So why did you comment?

      This thread is about Mr. Branson, his efforts, and his response. Re-read the first six words of your comment and see if maybe, just maybe they also apply to you.

      Please feel free to tear into my critique and clearly expose the reasons it is wrong.

      I applaud Mr. Branson and his efforts even though I do not agree with his response and actually say why.

  • WOW….somebody stands up for the industry and instead of offering support all you can do is tear down his response???? This is exactly what is wrong with this country….someone stands up to accomplish something, or right a wrong, and instead of support or even a better idea and all anyone else can do is tear it down. Stop the bit–ing.

    • Gr28lkk,

      Over and over again I point to the first sentence of my critique. I applaud Mr. Branson and his efforts even if I dislike his response and say why.

      Maybe you missed it but the worst charge I know that has ever been leveled at this industry is found in the MSNBC.com article. In it the author quotes an attorney who allegedly says: “‘THESE LOANS ARE DESIGNED TO WIPE YOU OUT,’ says attorney…. ‘BY THE TIME THE LOAN IS DUE, NOBODY CAN PAY IT BACK.’” This attorney calls himself a senior advocate and has made several comments on the RMD website. He KNOWS this is not the truth.

      Here is the anemic response: “The borrowers all get an amortization schedule which shows exactly what the borrower(s) will owe at any time during the life of the loan…. Nothing could be further from the truth and savvy reverse mortgage borrowers plan their needs accordingly.” The first sentence is flat out wrong. While it is marginally true for fixed rate HECMs, since when does an amortization schedule show exactly what the borrower will owe at any time during the life of an adjustable rate HECM? Other than the first part, what does the last sentence even mean? Who can plan “their needs”? What defense is an amortization schedule against such charges or the fact that savvy borrowers plan “their needs” accordingly?

      Why is the partial quotation of the attorney and this response buried in the tenth paragraph of fourteen in a middle section of the response? Even if Michael had done a great job handling all other problems in the article, responding to the alleged charges of this attorney in that way ruins anything else that might have been written or done.

      How can any originator who really believes in this product defend such a meaningless response? If anything it makes the charges in the alleged statements of the attorney look true. This is not an adequate response it is plain and simple an anemic capitulation to the falsehoods the attorney is purported to have made. Please read my statement again, the two sentences I quote attributed to the attorney are nothing but falsehoods about the HECM product and its design. It is a savage attack against those at HUD who have dedicated their careers to provide this very needed product to senior homeowners.

      If the blood of the originators in this industry does not boil reading a charge that a HECM is designed to wipe out a senior and that nobody can pay it back, why stay in this industry? These are the worst charges I have read. If you feel that citing that handing a senior an amortization schedule or making a half hearted admonition about planning needs is a reasoned response full of emotion, I question if your mind and heart are in this industry.

      It is time our industry grows up and learns it needs to react less by emotions and more by reason driven by emotion. Poorly written, aimless responses that are only marginally relevant to the subject at hand reflect badly on us and our industry. You with many others choose to applaud mediocrity and not call it for what it is.

      Please explain why my reaction is so wrong!!!!! Just rereading this nonsense drives my blood pressure up. I clearly do not choose to congratulate the author on his response, period. Such gestures result in ever increasing mediocrity.

      • My blood also boils when I read the charge from the attorney that has contributed to this site in the past. I decided to do a quick search on this gentleman to learn more about his role as a professional serving seniors. If you are an originator in CA, I would highly recommend that you educate yourself on the damage he could be doing in your market.

        Here's a description of the services his employer provides – http://www.canhr.org/about/index.html

        More importantly, look how often he is speaking to your potential referral sources with an obvious bias AGAINST reverse mortgages – http://www.canhr.org/ConsumerOutreach.html

  • We need to respond to these articles as soon as they appear. It does not need to be eloquent, although that is great. If we only respond when it is eloquent or with an industry voice then we will not respond often enough or quick enough. We need to just do it! We should respond quickly and accurately to all misinformation.

  • ConsumerMan's article on MSNBC.com has a load of direct rebuttals (and some reverse mortage “hate mail”) in the comments below his article. Almost all of them are much more timely than this re-hashing, including responses from other lenders who rebutted directly instead of trying to use last week's indignation to bolster the industry's perception of that lender.

  • I've always enjoyed reading Michael's rebuttals to articles, along with the other commentary offered on their website. I think Michael, and his son Cliff, are an excellent team and I'm glad they're in our industry.

  • Can someone please identify for me who the “PLAYERS” from the subprime business that have moved over to the Reverse Mortgage really are? I have heard this reference repeatedly over the last couple of years from our opposition as well as how reverse are “eerily similar” to those that drove the subprime boom and led to its bust but I have never seen or heard of who these people or companies/lenders actually are or exactly what the similarities to the subprime boom are? Can someone, anyone please give me details on these statements? I really want to know who they are are and how RM’s are similar.

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