Senior Advocates Challenge Findings in CU Reverse Mortgage Report

A report published by Consumers Union on reverse mortgages earlier this week is based on dated information and intended to scare consumers and seniors according to the Coalition for Independent Seniors.

“Seniors should know that reverse mortgages are sound economic tools that allow them to leverage their own wealth to continue to support themselves and live in their homes longer,” said Jeff Lewis of the CFORIS.  “The Consumers Union report does a disservice to seniors by repeating myths about the program. The reality is, the reverse mortgage program is government-backed and heavily regulated by FHA to protect consumers and their interests.”

The report uses 26 instances of questionable practices to prove its point, despite there being over 2000 reverse mortgage lenders nationwide according to CFORIS.

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“We have a good product, seniors like it and it benefits the seniors, their families and society as a whole,” said Lewis. “Consumers Union didn’t talk with lenders or borrowers before issuing this report. If they had they’d hear what we hear from seniors – that the program has given them the financial independence they want and the ability to meet unexpected expenses and continue to live in their homes.”

Thair Phillips, President of RetireSafe, a 400,000-supporter strong national advocacy group for older Americans, believes that reverse mortgages are an important option for seniors.

“Having a financial option that allows seniors to remain in their homes is a godsend to our members who have obtained reverse mortgages in these troubled financial times,” he said. “Seniors don’t want to depend on the government but would rather use the equity they worked so hard to build up in their homes as a way to remain in their home and continue their older years in dignity.”

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  • Yesterday I was reviewing this subject with my client and he too feels the reports are unfortunate because they’ll keep some of his peers from seriously considering a Reverse Mortgage. His wife told me hes been researching Reverse Mortgages for 5 years, and finally decided to seriously investigage them when he recently read about the reduced fees. So he’s well informed, and pointed out all the flaws in the articles to me. I told him it’d be very helpful to my industry if he’d comment about the articles here at RMD, so the industry can hear from a real consumers perspective … from a consumer that’s actually spent quality time researching and investigating the subject.

    They’re getting a Jumbo Reverse from Generation Mortgage, and it funds today, and they’re very comfortable with their decision.

  • Yesterday I was reviewing this subject with my client and he too feels the reports are unfortunate because they’ll keep some of his peers from seriously considering a Reverse Mortgage. His wife told me hes been researching Reverse Mortgages for 5 years, and finally decided to seriously investigage them when he recently read about the reduced fees. So he’s well informed, and pointed out all the flaws in the articles to me. I told him it’d be very helpful to my industry if he’d comment about the articles here at RMD, so the industry can hear from a real consumers perspective … from a consumer that’s actually spent quality time researching and investigating the subject.

    They’re getting a Jumbo Reverse from Generation Mortgage, and it funds today, and they’re very comfortable with their decision.

    • rainmand,

      The trouble with a blog is anyone can write whatever they want. Who can verify who the author is? Not even Admin knows that. If I had not read one of your comments where you signed off as Raymond Denton, I would have no idea who rainmand is.

      It would be far better if your senior found a nationally recognized reporter who wants to do a story on the subject and in the article verified that he had thoroughly checked out his source. It is not a bad idea if he sends his story to Ms. Elizabeth Warren as well.

  • Some will not like this comment even one little inch. It is not written to win any popularity contests. While the vast majority of the conclusions in the Consumer Union report are deplorably wrong, there is a measure of merit in it; however, to find it is like looking for flakes of gold in a century-old abandoned diamond mine using a small flickering flashlight as the sole source of light.

    For example, the marathon length of far too many counseling sessions must be addressed. It is in many cases excessive even if necessary; some have described it as cruel but it is no longer unusual. Breaking it into two parts is not wrong but having the financial assessment portion mandated first is inappropriate when there is no evidence from an independent third party that the senior even knows what a reverse mortgage is. (The litigation side of this group is in full display with their cry for a mandate to digitally record all counseling sessions.)

    What is wrong with a 30 day rule for rescission, if it is tied to the date when the application is completed except for foreclosure and a limited number of other specified financial crises? Making it the longer of thirty days following the date of application or three days after closing like it is now does not seem unreasonable. Making it thirty days following closing is not only unreasonable but it would also be irresponsible and destructive for any lender.

    Requiring counseling for all reverse mortgages is not unreasonable as long as it applies to all negatively amortized loans and deferred payment agreements where the home serves as security.

    Removing some counseling exemptions seems reasonable. Their list looks far too excessive.

    The purpose of this comment is to address the need for all of us to look at the report, ignore its ridiculous claims, and see if it has any redeeming items in it. Indeed, in my eyes there are a few, a very, very few.

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