Minnesota AG Wants to “Put Brakes” on Reverse Mortgages

Minnesota Attorney General Lori Swanson expressed concerns about reverse mortgages in a news segment airing this week seeking to answer the question: When a reverse mortgage works, and when it doesn’t. 

The segment includes interviews with two reverse mortgage borrowers as well as a reverse mortgage counselor and Attorney General Swanson finding while the idea is simple enough, there are some caveats. 

“Some people think it’s easy money or free money, but it’s a very complicated loan,” Swanson says. Additional concerns surround cases where one spouse in a couple is not on the home title, Swanson says. 


AG Swanson has previously expressed concern over reverse mortgage use, despite a Minnesota campaign, “Own Your Future,” which highlights the products’ benefits. 

View the segment.

Written by Elizabeth Ecker

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  • The opinions of AG Swanson extend far beyond her state. With some of the strongest advocates in the industry in Minnesota including Mr. Atare Agbamu and Ms. Beth Paterson, it would seem the AG would be less reactive. Few could explain the program better than the HECM advocates in Minnesota. Hopefully, NRMLA will continue its work in Minnesota and we will see an overall more reasoned view coming from the AG.

  • Cars sometimes go too fast. Perhaps we should “put the brakes on them”, or better yet, just eliminate them. There would be fewer deaths on the highway, and besides, we could live cheaper without car payments. What about the other 98% of the drivers that don’t wreck their cars or go too fast. Do they matter at all? This story is not worth the “ink” wasted on it except to learn how silly our system has become under the new “consumerism” coming down the pike now. Don’t buy a lawnmower, it may cut your foot off.

  • Minnesota Attorney General Lori Swanson needs a good course in the basics of reverse mortgages. She wants to do away with the program completely in her state. Ms. Swanson gave no valid reason that her state should do away with the program, talking about exaggerating?

    Naturally a reverse mortgage is not for everyone. It is never a good idea to do what the one couple did in the video, take the wife off the deed because of age. However, some time a critical emergency is at hand and there is no choice but to take a spouse off the deed because of the critical need for a certain amount of funds.

    There are always exceptions to the rule. Another point that was made was the kind of advise a senior gets from a loan officer. It is not that the reverse mortgage program is bad but it may be the loan officer was bad in giving bad advise.

    The short and the long of it is that reverse mortgages are not the villain here, the program is great and fits the need of so many and will become needed more and more as time goes on.

    We need as an industry to continually educate communities, public servants, the media and mainly the loan officers that come face to face with our seniors. We need LO’s and companies to care and have a passion for our seniors, we owe it to our seniors to have well informed and educated loan officers in the field representing our industry!

    John A. Smaldone

    • While the MN Attorney General does not support reverse mortgages, the State of Minnesota Own Your Future initiative includes reverse mortgages as an option to pay for long term care: (www.mn.gov/ownyourfuture) Their piece on reverse mortgages is here: https://edocs.dhs.state.mn.us/lfserver/Public/DHS-3733F-ENG

      During the 2009 legislation I provided the AG a package of reverse mortgage information and educational pieces including the sample loan documents.

  • As to the average age of borrowers, the current age trend information is absolutely wrong. For example, the segment quotes Mr. Skalicky as saying:

    “Started out, it was probably right around 74-76 years old (for the average customer) and a widow,” said Skalicky. “Now, it is gradually come down to where it is now (the age of customers) in the 60s and it is couples that are doing it. It is changing over time.”

    But is this true?

    HUD provides this information to the general public in its monthly HECM Characteristics report. While Mr. Skalicky is somewhat correct on the general age range and demographic between fiscal year 1990 and 2004, the average age of the YOUNGEST borrower was 71.9 years old last fiscal year.

    Mr. Skalicky is also right that there are more multiple borrowers today than in the past. That means there are borrowers who are older than the youngest borrower as well. If one is referring to the average age of borrowers, then last year, the average age of a borrower was at least 72 and probably back into the mid 72 year old age range belying the notion that the average borrower is now in their 60’s.

    While it is true more 62 years are looking at reverse mortgages than ever before, it is also true that there are more far more 62 year olds today in general than in 1989.

    In fiscal 1990 the average age of the youngest borrower was 76.7 and today 71.9 for a drop of not even five years.

    As a CPA, accuracy is extremely important and inaccurate statements can lead to incorrect conclusions about the product and its impact on borrowers. This opinion is not necessarily that of Security One or any its affiliates.

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