FINRA No Longer Describes Reverse Mortgages as “Last Resort Loan”

Research conducted by a Security 1 Lending-assembled Funding Longevity Task Force has led to the Financial Industry Regulatory Authority (FINRA) no longer describing reverse mortgages as a “loan of last resort.” 

The financial sector’s self-regulator removed a statement from its published investor alert that stated previously reverse mortgages should be used as a product of last resort, an action the task force says was taken on the basis of recent research it has reviewed.

The Funding Longevity Task Force’s goal is to eliminate reverse mortgage misconceptions among financial planners and regulators in order to benefit retired homeowners and the reverse mortgage industry as a whole. Task force participants reviewed recent findings from academic investigators including Gerald Wagner, Ph.D., Jack M. Guttentag, Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania, and Shaun Pfeiffer, Ph.D., associate professor at Edinboro University. 


Ongoing academic investigation yields growing proof that housing wealth, when used conservatively early on in retirement, can sustain cash flow, the task force notes. 

“I am pleased that FINRA has made this important change to their Investor Alert, but there is still much work to be done,” said Alex Pistone, senior vice president of Security 1 Lending, in a statement. “The Task Force is now looking to engage the industry’s compliance officers and software companies to encourage the use of housing wealth as a financial planning tool, all based on the solid research that has been done.”

Task force members include John Salter, Ph.D., CFP, Associate Professor of Financial Planning at Texas Tech University, Barry Sacks, Ph.D., J.D., comer physicist and and tax and pension lawyer, Sandra Timmermann, Ed.D., former Director of MetLife’s Mature Market Institute, Rita Cheng, CFP, CEO of Blue Ocean Global Wealth, and Shelly Giordano, Director of Business Development for Security 1 Lending.

Written by Alyssa Gerace

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  • It is not only important for the industry to work for change in perception but it is important individual lenders do as well. A task force of this nature can do much to change the image of HECMs within the financial community. By this action they have proved they are not merely educators seating around discussing theory and ideas but an active group working to produce tangible and intangible results.

    Congratulations to the task force. Let us hope other lenders follow suit.

  • I would encourage anyone with an interest to go to the FINRA web site and read the Investor Alert – it is entitled, “Reverse Mortgages: Avoiding a Reversal of Fortune”. It is appears that, at least through Friday Jan 24, downloading the ‘Printer Friendly’ version using the link provided on the site still yields the PREVIOUS version of the Alert containing the “last resort” language. Hopefully this will be corrected soon.

  • In
    the world of financial products, especially for seniors and retirees, a
    financial endorsement or cautionary note from an organizational body such as
    FINRA can make or break
    perception. I am pleased to see that they have removed the “loan of last resort” verbiage from their industry alerts and are now sanctioning a Reverse Mortgage as a planning
    tool to help extend the overall life of one’s retirement assets as they most certainly do.

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