Reverse Mortgages Come Back to the Today Show

NewImage.jpgAs part of NBC’s Money911 segment on Wednesday, a caller asked about reverse mortgages and whether her mother should obtain one.

The woman asks:

Well, I’m trying to help my mother decide whether or not to take out a reverse mortgage on her home. She meets all of the qualifications. So my questions are what happens if she outlives the money from the reverse mortgage, or if she dies, is my family responsible for paying back the amount? And also, who owns the home at that point?

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David Bach, the Founder of finishrich.com takes the question and plugs the new HECM Saver.  The product was released in October as a way for borrowers to borrower less money at a lower cost compared to the HECM standard.  Want to see what he says? Check out the video below.

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Thanks to Josh for the tip!

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    • No kidding. Take a lump sum as the first option? And then skip mentioning the need to maintain the property and pay the taxes and insurance? Okay, I’m the first to admit that these loans can be a complicated mess, and telling someone about them in 2 minutes or less is impossible. However, I think it borders on negligence not to mention the need to maintain the property and the need to pay the taxes and insurance. Particularly when so many of these loans are in trouble because of the insurance. I also would never utter “lump sum” on a show like the Today Show unless specifically asked about it or explaining all of the possibilities.

      Frank J. Kautz, II
      Staff Attorney

      Community Service Network, Inc.
      52 Broadway
      Stoneham, MA 02180
      (781) 438-1977
      (781) 438-6037 fax
      FrankKautz@csninc.org –work
      Frank@Kautzlaw.com –private

      • Frank,
        Would you have described the mortgage position required to obtain a HECM differently? By how he described it, most of my customers could not have qualified for a HECM.
        Then there was the matter of responsibility for payment of the HECM. He did not state anything about its nonrecourse nature. Neither did he discuss a possible disclaimer by the heirs if it were recourse. If I was an heir listening to the presentation, I would not want that evil thing lingering out there, waiting to lurch out against me and my fellow heirs to take all of our assets when the house is worth less than the balance due.
        What kind of financial information and advice is this individual providing? Sure did sound rather reckless and careless to me.
        If there is only two minutes then he should have taken the question, said that here is a partial picture but there was more to it. As to the payoff, he should have said the note is nonrecourse which means the borrower (and heirs) have no personal liability for the debt but for more information about their other responsibilities related to it, talk to the counselor or lender about it.
        Rather than describing the information as wrong, I would call it rather misleading and potentially harmful. Like too many so called advisers, he failed to refer the individual to someone more knowledgeable on the subject.

  • Let me put it this way. I would not want the message this guy presented as the marketing information my firm provides.
    First the speaker made it appear as if all liens had to be paid before applying for a reverse mortgage. If that were true, I would have to close my doors. Second he expressed no thought that showed he understood the value of the nonrecourse nature of a reverse mortgage.
    Image a PR campaign where you stated that all debts against the home must be paid in full before application and stressed the fact that the family after the death of the borrower must pay off the loan without describing the nonrecourse aspect of a reverse mortgage. How much business would you have?
    Whether we want to acknowledge it or not, that was a discussion about a mortgage other than a reverse mortgage. It was truly that teaching moment which went awry. Just because it did not condemn the idea of getting a reverse mortgage, the speaker certainly gave pause about doing so to millions of viewers.

    Statements and reinforcement of this nature create a difficult barrier to penetrate with the truth about reverse mortgages. Sometimes those who speak positively about reverse mortgages can do more damage than those who speak negatively.

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