A reverse-mortgage focused article, “Reverse Mortgagers See Rising Need, Old Fears,” in online financial publication The Street discusses the increasing need of reverse mortgages for those in the “sandwich generation,” and offers a strong defense from Generation Mortgage‘s Jeffery Lewis.
Presenting reverse mortgages as an option for older people who don’t have the retirement income they want—or need—the article addresses problems reverse mortgage loans have encountered in the past, calling concerns a “lingering taint of controversy and criticism.” Those problems include the bundling of reverse mortgages and “unnecessary financial products.”
Lewis says the loans could be hard to come by for those who lost home value in the economic decline, but now that the market is stabilizing, there’s a better sense of home values for those in the market. He also says the industry welcomed increased government oversight and regulations such as those in Dodd-Frank.
“The fact is that the industry has been heavily monitored and we’ve welcomed all that oversight,” Lewis told The Street. “We all know, and take very seriously, the responsibility we have when our customer base is only seniors and primarily seniors in some sort of financial distress. We understand there is a lot of oversight that is going to go along with that.”
While Lewis said he questions efforts to curb cross-selling that have led many brokers and advisers away from reverse mortgages, he defends the product and highlights the option it provides.
“For most Americans, their home is the biggest part of their net worth,” he said. “We are so afraid of somebody buying the wrong thing because it was bundled with their reverse mortgage that we are preventing there from being any comprehensive discussion of seniors’ finances. By building walls around these products, I think we are creating more danger than safety. Nobody wants to see people taken advantage of, but the place where the first and second line of defense for making sure that doesn’t happen should be in the compliance departments of these other industries.”
He points to the insurance industry as another that should receive added attention and regulation.
“If someone is 90 years old and they buy a deferred annuity with 13 points of sales charges and 10 years of surrender charges, that’s probably not an appropriate product for that person,” he told The Street. “I don’t know how this became our problem. The insurance industry actually avoided a big increase in regulation in the financial services reform bill. Annuities that have equity-like characteristics were going to be characterized as investment products and the people who sold them were going to have to be registered—as people who sell investment products are. But somehow, the insurance industry wiggled off the line on that one. They have Teflon and we have flypaper.”
Read the entire article.
Written by Elizabeth Ecker