Reverse Mortgage Industry Calls Consumer Union Report Highly Misleading

Leaders from the reverse mortgage industry are calling a report published earlier this week by Consumers Union extremely misleading and irresponsible.

Citing abuses previously published by Consumer Reports, the report fails to mention regulations that have been put into place to prevent any more occurrences.

“There is absolutely no new information or any more current allegations than they have put out in the past,” says Peter Bell, President of the National Reverse Mortgage Lenders Association. “They fail to acknowledge and report on the many changes that have taken place in laws, regulations and requirements governing counseling and advertising, or any of the market dynamics that have brought down costs to consumers.”

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Published with the California Advocates for Nursing Home Reform and the Council on Aging in Silicon Valley, the group ask regulators to require that lenders ensure reverse mortgages are suitable products for seniors and establish a fiduciary responsibility to customers.

Additionally, they seek to outlaw deceptive marketing and adopt stronger prohibitions on cross selling.  Despite a law already in place that bans reverse mortgage lenders from requiring borrowers to purchase a financial product, the group wants to go one step further.

“What the bill left unaddressed is the conduct of the insurance agent or financial planner who sells products or services and convinces the senior to purchase a reverse mortgage in order to finance the transaction,” says the report.

In response to the accusations of cross selling, Jeff Lewis Chairman of Generation Mortgage and leader of the Coalition for Independent Seniors asks where the logic of warning against cross-selling comes from when there is a federal law that prohibits the practice.

Even a report from the Federal Reserve found that after conducting focus groups with reverse mortgage borrowers, “no one indicated that they were encouraged to purchase another financial product, such as an annuity, with proceeds from their reverse mortgage. In fact, one person said that he had to sign a waiver that he would not buy an annuity with the proceeds.”

What upset Lewis most is that the report fails to mention that the industry and regulators have been working to improve the controls in place to make the process better for the consumer.  “This is a highly regulated and ethical industry and the report offers zero specific new information about bad acts or actors in the industry,” he says.

Instead of using a reverse mortgage, the report recommends borrowers look for other options like cashing out a certificate deposit or asking family members.  Lewis says the group is living in a fantasy world where people have all of these options.

“The reality is that for many seniors, given their lack of adequate liquid retirement savings and the financial stresses faced by their children, the reverse mortgage represents the only means they have for financing their aging in place, which is the best result for the senior, their family and society as a whole,” he says.

More importantly, Lewis says the group feels that seniors can’t make decisions on their own.  “This report is an insult to FHA’s competent and careful watch over the industry and an insult to seniors intelligence and implies that seniors are incapable of making good financial decisions.  Look at the home equity position of our retirees as opposed to that of the next generation and tell me who’s incapable of making good decisions.”

Later this week, the National Reverse Mortgage Lenders Association is releasing new consumer research that shows a high degree of satisfaction by a significant sampling of current borrowers that will paint a different picture than Consumer Union’s report.

“All in all, the Consumer Union report is a miserable piece of work that is highly misleading and extremely irresponsible,” says Bell.  “It’s a shame that so many people will take its content at face value because they are perceived to be a reputable organization. I’m surprised that they would publish something that has so few facts to back up their assertions.”

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  • Peter hit the nail on its head. Peter knows how to address our accusers and how to put them in their place.

    Sometimes I wish Jeff would hold his tongue. By some of the quotations in the article above, Jeff played right into the hands of these accusers with his description of seniors who need this loan – he makes it appear to be a loan of last resort anyway. That is no rebuttal to the accusations whatsoever; it simply reinforces their point of limiting it to the people Jeff describes.

    Jeff did get some points across. Among his best was the underlying principle in the propaganda that somehow anyone over 62 is incapable of making good financial decisions.

    Do those who produce this age discrimination propaganda realize that the primary recipient of their epistle is Ms. Elizabeth Warren who will be 62 in less than 7 months? Do they understand that the Vice President and most Congressional leaders are older than or close to being 62? Have they never heard of the current financial genius of Warren Buffett?

    They kind of remind me of the 60’s radicals who proclaimed: “Trust no one over 30.” The slogan of this “Gang of Three” should be: “Don’t trust anyone over 62 to make sound financial decisions.” At least the 60’s radicals were honest enough to say what they meant.

  • Thank you Peter Bell and Jeff Lewis! It never fails to amaze me how the people who claim to endeavor to protect seniors are so out of touch with their needs, not to mention the FHA-Insured Reverse Mortgage program. Many of my clients have become very educated on the program through public sources, yet these critics don’t seem to have access to the same information. The most staggering comment is to suggest that they are to be told a reverse mortgage is an option of last resort! Say’s who? I have had many borrowers who tell me their children are better off than they are, or don’t have children, and choose to use the equity in their home while they are healthy and able to best enjoy their retirement. Afterall, it’s their money!

  • I sure hope the rebuttal gets as much media attention as the original horrific, distorted and highly-damaging press release by Consumer’s Union.

    • reversemaniac,

      I agree in part but the most crucial issue is what the CFPB report says about reverse mortgages. If we win the media battle now but lose as to the CFPB report to Congress on reverse mortgages, we will have won a battle but lost the war.

      I may be wrong, but it is not so much how we do today that is at stake. Yes, we can win the battle and the war but my greatest concern is we act like General MacArthur and skip some battles to concentrate on what counts, winning the war.

    • reversemaniac,

      I agree in part but the most crucial issue is what the CFPB report says about reverse mortgages. If we win the media battle now but lose as to the CFPB report to Congress on reverse mortgages, we will have won a battle but lost the war.

      I may be wrong, but it is not so much how we do today that is at stake. Yes, we can win the battle and the war but my greatest concern is we act like General MacArthur and skip some battles to concentrate on what counts, winning the war.

  • Thank you Peter! We need to come out with strong responses to these people who are still citing one of the most uninformed pieces ever written. on Reverse Mortgages by Consumer Reports.
    I don’t agree with your last line: “I’m surprised that they would publish something that has so few facts to back up their assertions.” This does not suprise me at all! Some people just have a biased opinion on Reverse Mortgages. As in this case it seems the opinion is based on what they read and not on unbiased research.

    • treverse,

      Like Peter, I am surprised. I cannot speak for Peter but here are some of my reasons.

      The three individuals are highly educated and know how to lay out their arguments to win. They also know the danger of staking a position on information which has previously been discredited. So why do it?

      Do the opposing ones have a strategy in mind which will result in some kind of trap for the industry when we respond like we are doing and will do? Do they know us better than we know ourselves? Or are they simply trying to be first so that we will be more on the defensive throughout the task force fact gathering process than we otherwise would have been? What is their strategy in providing “evidence” which has been discredited in the past? Again they are NOT dumb.

      • Good questions Cynic. Do you think they are taking an initial position way out in left field, so when it comes time to negotiate, they get some of their provisions to stick?

        I’d like to know more about the three individuals that prepared the report to see what they stand to gain if they get their way. They cannot possibly stand behind the “we want to protect seniors” banner, unless they are just that ignorant.

      • Good questions Cynic. Do you think they are taking an initial position way out in left field, so when it comes time to negotiate, they get some of their provisions to stick?

        I’d like to know more about the three individuals that prepared the report to see what they stand to gain if they get their way. They cannot possibly stand behind the “we want to protect seniors” banner, unless they are just that ignorant.

      • Matt,

        There are some in the industry who have spoken with Prescott at great length. I do not know anything about the other two but Consumer Reports has long been negative towards reverse mortgages; why is another question someone else must answer.

        As to strategy, I cannot speak for the three but I am sure your assumption is one of their alternative objectives. No doubt, their primary objective is to poison the bureau particularly the task force against the use of reverse mortgages other than for what they promote reverse mortgages should be used.

        Except in certain contact sports, starting on the defensive where there is no guarantee as to who will get the last word is a horrible proposition. Sometimes the best way to handle that situation is to provide the information NRMLA has been and will continue gathering which shows how seniors are being helped by reverse mortgages and their level of satisfaction.

        It would be helpful to know the position of Ms. Warren on the issue since she will have great influence on the bureau and its activities.

        I apologize that all I can offer is more questions with no real solutions or counter measures.

    • treverse,

      Like Peter, I am surprised. I cannot speak for Peter but here are some of my reasons.

      The three individuals are highly educated and know how to lay out their arguments to win. They also know the danger of staking a position on information which has previously been discredited. So why do it?

      Do the opposing ones have a strategy in mind which will result in some kind of trap for the industry when we respond like we are doing and will do? Do they know us better than we know ourselves? Or are they simply trying to be first so that we will be more on the defensive throughout the task force fact gathering process than we otherwise would have been? What is their strategy in providing “evidence” which has been discredited in the past? Again they are NOT dumb.

  • Good day,

    What Peter and Jeff brings out is the reality of the entire report, it is ludicrous! I have been looking at all of this as overkill and fear on the part of the reporting agencies, advocacy groups and those on the hill.

    I am now starting to have my doubts. Is this an intentional marketing move to discredit the reverse mortgage industry any way they can? I say this because what is being said in these reports are not even logical and appear to be with out research.

    They fail to acknowledge and report on the changes that have taken place in the industry already.

    As Peter Bell pointed our, we have changes with the laws, regulations and requirements governing counseling and advertising, or any of the market dynamics that have brought down costs to consumers.”

    Also, Jeff makes a very good point, “The report fails to mention that the industry and regulators have been working to improve the controls in place to make the process better for the consumer”. The Critic brought up many good points as well.

    We seem to battle a new issue every day. We are doing everything we can to keep up with the concern. However, who is listening to us or are they hearing only what they want to hear? Why is their such a movement against the reverse mortgage industry. Where were they all when people were really being taken by the Sub-Prime industry?

    The cross selling issue should not even have been brought up, it is taken care of already by regulation. This was a miserable report done purposely to discredit our industry with no justification behind it. It is sad and a waste of time that we have to defend ourselves and comment on something like this.

    Thank you,

    John A. Smaldone

    • John,

      This was a brilliant stroke by our opposers.

      By stringing enough complaints together whether discredited or not and branding them with a publicly recognized consumer protection publication like Consumer Reports, you have a potent mixture when it comes to a consumer protection organization which will be under great stress to meet all of its obligations including doing a report on reverse mortgages in its first twelve months of operations.

      I know industry leaders were happy that the Consumer Financial Protection Bureau (“CFPB”) is being overseen by the Fed and the mandated product is now a report to Congress rather than regulations. They are and were right but where the problem lies is that this work must be done within 12 months after the organization is in full swing when they are learning how to get the office, find their desk, adjust to different benefits, etc.

      It was generally believed before the passing of the Dodd Frank bill that Ms. Elizabeth Warren would have a small role in the CFPB. The President found a way around that. Ms. Warren is now a wildcard. We need to gain the ear of Ms. Warren and make our first formal counterstrike BEFORE the CFPB forms the task force which will research reverse mortgages and report back to Congress. Now that Ms. Warren has officially been placed on notice on the position of the Consumer Union and these other two groups, a point-by-point rebuttal must swiftly surface to be effective. Waiting to respond formally to the report of the accusers means that perhaps our cries of these cases being previously and thoroughly discredited are greatly overblown.

      We do not need even two different organizations speaking separately on this issue. We need one voice supported by several organizations or one message coordinated together as one. Like The_Critic, I wish some leaders would not raise their own arguments. Even if those leaders feel they are smarter or more gifted, a coordinated effort is superior to many strategies each cancelling out the other.

      • Good luck getting Ms Warren’s ear. Ms. Warren comes from the National Consumer Law Center. To get a feel for the NCLC opinion, see:

        http://fwd4.me/aEJ

        I will also say that I have spoken with Ms. Warren several times on this topic, she is not fond of Reverse Mortgages. She can see the necessary evil in them occasionally, but do not put your hopes in her help. She is far more likely to follow what the folks from California have said than anything that the mortgage industry wants.

        I will also say that she is a very nice lady and open to reason, but she has seen the worst excesses of the banking industry. It will be hard to convince her that any banking practice is good for consumers. When told that banks couldn’t make money under the new regulations, her comment was “Do you mean to tell me that the only way that banks can make money is by cheating the public?”

        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,

        I read the document you cite when it first came out. It led to much of the equating of HECMs with subprime. Its title is over slightly biased “Subprime Revisited; How Reverse Mortgage
        Lenders Put Older Homeowners’ Equity at Risk.”

        I am very familiar with the work of Prescott Cole who is a licensed California attorney and is credited as a contributor to the nonsense promoted in the booklet you cite. Of course I always love to read that not only is Ken Scholen acknowledged in the credits to that booklet but so also is our own Jeffrey Taylor, the chairman at Reverse Marketing Insight and cofounder of NRMLA.

        What I was not aware of was that Ms. Warren was from the National Consumer Law Center. That puts her bias in a whole different light and perspective. Our own Lance Jackson has vocally come out in support of Ms. Warren; I wonder if he understands this is her background.

        The Center is definitely not a conservative think tank nor a pro-business organization. It certainly reflects the opinions of one of the most radical wings of the Democratic Party. It does not express the view of the wing of the Democratic Party supported by Representative Frank and Senator Feinstein nor my own. It is more in line with the views of Senators McCaskill and Kohl at least as to reverse mortgages.

      • If you look carefully at the publication, you will note my name is in it as well. I gave some very unbiased information, including a mock counseling session to NCLC for this report. I knew where they were coming from, and, while I do agree that HECM’s can be misused and that people can be misled by brokers, I find that it is not common. (I wish I could say it was very rare, but I see some of it in my counseling sessions. It is either deliberately misleading, or a certain national bank needs to train its people a lot better.) I have seen some major abuses and I have seen banks do some wonderful things. (I wish one bank in particular would let me publicize what they did, it is the kind of thing that truly shows how a bank can forego fees to really help people.) However, I doubt that I am unique. I am willing to bet that everyone has seen the good and the bad when it comes to reverse mortgages.

        I did write up a pamphlet entitled “Reverse Mortgage Danger Singals” a number of years ago. I revised it earlier this year and the folks at Legal Aid of Western Michigan have put a copy on the web here: http://fwd4.me/avc. If you would like a pdf of it, feel free to drop me an e-mail.

        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,

        I am glad to read that the originators of nationally chartered banks are in total and complete compliance with all HECM requirements and no counselor has ever questioned their training or business practices. This helps explain why they must be exempted from the NMLS licensing requirements and must only register with NMLS. Maybe they should be exempted from registration as well? (LOL)

        It is also very comforting to know that if there are any problem cases they are not concentrated in any one nationally chartered bank. We all know that the reviews and controls are so extra guarded that the originators of all nationally chartered banks as well as the banks should be exempted from any oversight under the NMLS. (LOL)

        I do not blame the one bank that did so much to help some people for not wanting its name up in lights. If that was the situation, I am sure many would be trying to take undue advantage of their kindnesses, even suing because of alleged favoritism.

        Are you saying that the Law Center intentionally tries to embarrass its opponents by thanking them for their help in their publications? If so then they are as devious as they seem.

        What was the position of Ms. Warren at the Law Center??

      • While Ms. Warren did not have a paying position there, she has worked on a large number of their books, both with and without credit. Ms. Warren was also a fixture at NCLC conferences and was always available to members of the National Association of Consumer Attorneys. She is first, last, and at every point in between an activist. Unfortunately for all of us, activists are always the ones selected for these types of posts, never the folks in the middle who use reason rather than rhetoric to regulate and make decisions.

        I don’t think that the NCLC attempts to embarrass opponents. Please understand, I am not an opponent of them. While they tend to be a bit militant for my tastes, they do do a lot of good things there. Many will accept Reverse Mortgages as useful, but they still go after them because they think that they are bad for consumers. I worked with them on that publication because I wanted to make it clear that there are times a reverse mortgage is useful. Unlike many counselors, I do not necessarily think of a reverse mortgage as a last choice option, but I do think that people need to be sure about what they are getting into before signing on the dotted line. I tried to bring that philosophy into my interviews for the book. I also brought that philosophy with me when I spoke at the conference this year on reverse mortgages.

        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

      • While Ms. Warren did not have a paying position there, she has worked on a large number of their books, both with and without credit. Ms. Warren was also a fixture at NCLC conferences and was always available to members of the National Association of Consumer Attorneys. She is first, last, and at every point in between an activist. Unfortunately for all of us, activists are always the ones selected for these types of posts, never the folks in the middle who use reason rather than rhetoric to regulate and make decisions.

        I don’t think that the NCLC attempts to embarrass opponents. Please understand, I am not an opponent of them. While they tend to be a bit militant for my tastes, they do do a lot of good things there. Many will accept Reverse Mortgages as useful, but they still go after them because they think that they are bad for consumers. I worked with them on that publication because I wanted to make it clear that there are times a reverse mortgage is useful. Unlike many counselors, I do not necessarily think of a reverse mortgage as a last choice option, but I do think that people need to be sure about what they are getting into before signing on the dotted line. I tried to bring that philosophy into my interviews for the book. I also brought that philosophy with me when I spoke at the conference this year on reverse mortgages.

        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,

        I am glad to read that the originators of nationally chartered banks are in total and complete compliance with all HECM requirements and no counselor has ever questioned their training or business practices. This helps explain why they must be exempted from the NMLS licensing requirements and must only register with NMLS. Maybe they should be exempted from registration as well? (LOL)

        It is also very comforting to know that if there are any problem cases they are not concentrated in any one nationally chartered bank. We all know that the reviews and controls are so extra guarded that the originators of all nationally chartered banks as well as the banks should be exempted from any oversight under the NMLS. (LOL)

        I do not blame the one bank that did so much to help some people for not wanting its name up in lights. If that was the situation, I am sure many would be trying to take undue advantage of their kindnesses, even suing because of alleged favoritism.

        Are you saying that the Law Center intentionally tries to embarrass its opponents by thanking them for their help in their publications? If so then they are as devious as they seem.

        What was the position of Ms. Warren at the Law Center??

      • If you look carefully at the publication, you will note my name is in it as well. I gave some very unbiased information, including a mock counseling session to NCLC for this report. I knew where they were coming from, and, while I do agree that HECM’s can be misused and that people can be misled by brokers, I find that it is not common. (I wish I could say it was very rare, but I see some of it in my counseling sessions. It is either deliberately misleading, or a certain national bank needs to train its people a lot better.) I have seen some major abuses and I have seen banks do some wonderful things. (I wish one bank in particular would let me publicize what they did, it is the kind of thing that truly shows how a bank can forego fees to really help people.) However, I doubt that I am unique. I am willing to bet that everyone has seen the good and the bad when it comes to reverse mortgages.

        I did write up a pamphlet entitled “Reverse Mortgage Danger Singals” a number of years ago. I revised it earlier this year and the folks at Legal Aid of Western Michigan have put a copy on the web here: http://fwd4.me/avc. If you would like a pdf of it, feel free to drop me an e-mail.

        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

      • Good luck getting Ms Warren’s ear. Ms. Warren comes from the National Consumer Law Center. To get a feel for the NCLC opinion, see:

        http://fwd4.me/aEJ

        I will also say that I have spoken with Ms. Warren several times on this topic, she is not fond of Reverse Mortgages. She can see the necessary evil in them occasionally, but do not put your hopes in her help. She is far more likely to follow what the folks from California have said than anything that the mortgage industry wants.

        I will also say that she is a very nice lady and open to reason, but she has seen the worst excesses of the banking industry. It will be hard to convince her that any banking practice is good for consumers. When told that banks couldn’t make money under the new regulations, her comment was “Do you mean to tell me that the only way that banks can make money is by cheating the public?”

        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

    • John,

      This was a brilliant stroke by our opposers.

      By stringing enough complaints together whether discredited or not and branding them with a publicly recognized consumer protection publication like Consumer Reports, you have a potent mixture when it comes to a consumer protection organization which will be under great stress to meet all of its obligations including doing a report on reverse mortgages in its first twelve months of operations.

      I know industry leaders were happy that the Consumer Financial Protection Bureau (“CFPB”) is being overseen by the Fed and the mandated product is now a report to Congress rather than regulations. They are and were right but where the problem lies is that this work must be done within 12 months after the organization is in full swing when they are learning how to get the office, find their desk, adjust to different benefits, etc.

      It was generally believed before the passing of the Dodd Frank bill that Ms. Elizabeth Warren would have a small role in the CFPB. The President found a way around that. Ms. Warren is now a wildcard. We need to gain the ear of Ms. Warren and make our first formal counterstrike BEFORE the CFPB forms the task force which will research reverse mortgages and report back to Congress. Now that Ms. Warren has officially been placed on notice on the position of the Consumer Union and these other two groups, a point-by-point rebuttal must swiftly surface to be effective. Waiting to respond formally to the report of the accusers means that perhaps our cries of these cases being previously and thoroughly discredited are greatly overblown.

      We do not need even two different organizations speaking separately on this issue. We need one voice supported by several organizations or one message coordinated together as one. Like The_Critic, I wish some leaders would not raise their own arguments. Even if those leaders feel they are smarter or more gifted, a coordinated effort is superior to many strategies each cancelling out the other.

  • Good day,

    What Peter and Jeff brings out is the reality of the entire report, it is ludicrous! I have been looking at all of this as overkill and fear on the part of the reporting agencies, advocacy groups and those on the hill.

    I am now starting to have my doubts. Is this an intentional marketing move to discredit the reverse mortgage industry any way they can? I say this because what is being said in these reports are not even logical and appear to be with out research.

    They fail to acknowledge and report on the changes that have taken place in the industry already.

    As Peter Bell pointed our, we have changes with the laws, regulations and requirements governing counseling and advertising, or any of the market dynamics that have brought down costs to consumers.”

    Also, Jeff makes a very good point, “The report fails to mention that the industry and regulators have been working to improve the controls in place to make the process better for the consumer”. The Critic brought up many good points as well.

    We seem to battle a new issue every day. We are doing everything we can to keep up with the concern. However, who is listening to us or are they hearing only what they want to hear? Why is their such a movement against the reverse mortgage industry. Where were they all when people were really being taken by the Sub-Prime industry?

    The cross selling issue should not even have been brought up, it is taken care of already by regulation. This was a miserable report done purposely to discredit our industry with no justification behind it. It is sad and a waste of time that we have to defend ourselves and comment on something like this.

    Thank you,

    John A. Smaldone

  • Misleading is putting it mildly. This a nothing more than a rehash of old, alarmist, fear based rhetoric. That it is inaccurate, imcomplete, one sided and irresponsible should come as no surprise.
    The word ‘risky’ is used twice in quotes. Ms. Garcia comments that reverses are ‘risky for people who don’t understand the complex financial nature of the loan and how quickly costs and interests can add up’. Negatively amortized loans are nothing new but her statement implies that once a senior understands the details, the loan changes to a secure product. The product is either a risk based option or it’s not. The issue of negative amortization is one of the reason we have an amortization table to better help clients understand what the loan looks like over it’s lifetime for any given year.

    Ms. Reeves is worse in beating the tired old drum of reverses being the ‘last loan option’ someone should consider as you can lose all your equity and even your home!!!!. She seems oblivious to some basic facts concerning how it actually performs over time. If you live long enough, typically in the late 80’s range, it’s true your equity can be exhausted. That scenario generally does not take into account historically substantiated home appreciation rates that in normal times lessen the impact of the compounding interest. There are variables too, including the fact that the average reverse mortgage has a term of 7 years. Not nearly enough time to wipe out equity. I can only imagine that by ‘losing your home’ she is referring to the borrower no longer being able to pay their property taxes. I actually don’t know of any instances where a county assessor foreclosed on a reverse mortgage to get their money. I know situations where it became a lien to be paid upon the sale of the property.
    It’s shocking that outrageious statements like those these two ladies above made are actually getting an airing and ink. We always seem to end up three steps back after taking one forward. Funny how communications officers can make so much noise without knowing what they are talking about.

    • broshow,

      Never underestimate the intelligence and the intellect of your adversary.

      Let’s start with your statement: “There are variables too, including the fact that the average reverse mortgage has a term of 7 years. Not nearly enough time to wipe out equity.” Do you actually have some tangential experience in either the real estate or mortgage industries? These sentences certainly do not reflect it.

      For your information equity as you are presenting it is the mathematical difference between the market value of the home and the balance due on the home as of the same moment in actual time. I have several customers who watched their home equity wiped out in less than four years but it was not so much the reverse mortgage which wiped out the home equity of my customers at it was the decline in the market value of their homes. There is no guarantee their equity will ever become positive again; that is not until after the reverse mortgage is paid down. So please explain why your seven year claim has any fact in reality.

      Don’t be so secure that our amortization schedules are so helpful in disclosing the full impact of negative amortization as to reduced equity. I am certain none of my customers would agree with your position. While using the schedule as a launch off point, for many years I have ignored it to explain that home values might not rise and could go down making the cross over from positive to negative equity come much earlier in the process. That amortization schedule as to depicting actual equity is worthless from the moment you print it. It illustrates remaining home equity; it does not predict or indicate what it will be.

      There is absolutely nothing in your long overblown paragraph that reasonably or rationally contradicts anything Ms. Reeves states. Your comment only plays into the fears which Ms. Reeves could easily depict of reverse mortgage supporters, not knowing the impact of the product on the financial position of reverse mortgage customers. It is not the facts which Ms. Reeves states which bother me; it is her misleading conclusions. It is not Ms. Reeves who is oblivious to facts from the real world; it is….

    • broshow,

      Never underestimate the intelligence and the intellect of your adversary.

      Let’s start with your statement: “There are variables too, including the fact that the average reverse mortgage has a term of 7 years. Not nearly enough time to wipe out equity.” Do you actually have some tangential experience in either the real estate or mortgage industries? These sentences certainly do not reflect it.

      For your information equity as you are presenting it is the mathematical difference between the market value of the home and the balance due on the home as of the same moment in actual time. I have several customers who watched their home equity wiped out in less than four years but it was not so much the reverse mortgage which wiped out the home equity of my customers at it was the decline in the market value of their homes. There is no guarantee their equity will ever become positive again; that is not until after the reverse mortgage is paid down. So please explain why your seven year claim has any fact in reality.

      Don’t be so secure that our amortization schedules are so helpful in disclosing the full impact of negative amortization as to reduced equity. I am certain none of my customers would agree with your position. While using the schedule as a launch off point, for many years I have ignored it to explain that home values might not rise and could go down making the cross over from positive to negative equity come much earlier in the process. That amortization schedule as to depicting actual equity is worthless from the moment you print it. It illustrates remaining home equity; it does not predict or indicate what it will be.

      There is absolutely nothing in your long overblown paragraph that reasonably or rationally contradicts anything Ms. Reeves states. Your comment only plays into the fears which Ms. Reeves could easily depict of reverse mortgage supporters, not knowing the impact of the product on the financial position of reverse mortgage customers. It is not the facts which Ms. Reeves states which bother me; it is her misleading conclusions. It is not Ms. Reeves who is oblivious to facts from the real world; it is….

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