The reverse mortgage has a major public perception problem stemming from several causes, writes The Mortgage Professor Jack Guttentag in a column this week. Uninformed media reports, unwilling consumer groups and the administration that insures the Home Equity Conversion Mortgage have all taken part in preventing millions of people from taking out reverse mortgages when they would most benefit from them, Guttentag writes.
The column suggests some potential mechanisms including insurance companies and online resources to help alleviate the problem.
There are millions of [seniors] whose lives would be enriched with HECMs who haven’t taken them. The reason they haven’t is that they are either unaware of the program’s existence or they are aware of it but their impressions of the program are based on poor information:
Negative media coverage from ill-informed writers that stokes fears of losing their home.
Lack of support from consumer organizations whose attitudes toward HECMs range from ambivalent to hostile.
Inability or unwillingness of HUD/FHA to do anything of an educational nature that would counter these negative influences.
HUD/FHA does support HECM counseling, which is required on every transaction. However, the only seniors who are counseled are those who have selected a lender, which means that they are among the few who have overcome the misinformation hurdles listed above. Since misinformation discourages seniors from ever contacting a lender, counseling is not a remedy. What is required is an educational program….
While HECMs are a bit complicated, seniors need not be rocket scientists to understand everything that they need to know to make a rational decision on whether or not they want one. Because HUD’s website is heavily trafficked and has credibility, it should be the focal point of the Internet-based part of the educational effort. I propose a three-pronged approach.
Written by Elizabeth Ecker