NBC News: Widow’s Reverse Mortgage Tale Reveals Risks

One widow’s reverse mortgage “nightmare” underscores the financial tool’s risks, according to a recent article by NBC News.

Eighty-two-year-old Arlene Hill claims an “eager” broker provided false information about the terms of the reverse mortgage, and she is now fighting to keep her home in Simi Valley, Calif. since her husband passed away.

The broker allegedly encouraged Hill to remove her name from the title so she and her husband could qualify for a bigger reverse mortgage based on her older husband’s age, according to NBC.


“Three years later, after Herb [her husband] had died, Hill discovered the broker had failed to tell her that getting her name restored to the title would be costly and wouldn’t happen automatically, as she had been led to believe,” NBC says.

The article also references the Consumer Financial Protection Bureau’s report regarding misleading reverse mortgage ads.

Read the article here.

Written by Cassandra Dowell

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  • This is really sad! There are still some ‘bad actors’ out there and unfortunately they exist in every business. This kind of publicity gives us all a bad name. We need to work to get those loan officers out of our profession so things like this don’t happen.

  • I think this is a one sided story. This couple had lived in the home for 39 years and still owed $345,000 on a loan that was going to convert to P & I, which they couldn’t qualify for. If it took 90% of their savings to save the house from foreclosure by refinancing with a HECM, then clearly they wouldn’t have enough savings if the younger spouse was on the loan. They both had to attend an education session before getting this loan and the counselor would have told them what would happen if the husband died first. In my 11 years of doing reverses, the people that are facing foreclosure are so focused on staying in their home rather than selling, that they will take the younger spouse off of title to make the loan work. Why isn’t anybody blaming the banks that let these people keep refinancing until they couldn’t make the payments?

  • Mr. Simons,

    We all know how to close HECMs where there are discernible rules. The HECM in question was closed in an era when HUD said one thing and the law another.

    The law requiring HECMs to contain a provision protecting homeowners (including spouses) has not changed since the inception of the HECM insurance program [12 USC 1715z-20(j)]. HUD decided it did not want to follow the law but did not have Congress change it. Rather HUD has fought that law in Court, eventually losing the case, and at least so far has failed to appeal the loss to the Supreme Court.

    In 2013, HUD got Congress to pass the Reverse Mortgage Stabilization Act of 2013 (RMSA). Under its authority HUD has added Mortgagee Letters 2014-22 and 2015-02. The controlling Mortgagee Letter governing non-borrowing spouses is currently Mortgagee Letter 2015-02. While a little complex, it is fairly straight forward. Under the RMSA, HUD has done the right thing and where these two Mortgagee Letters conflict with 12 USC 1715z-20(j), these two Mortgagee Letters control on all HECMs with case number assignments after August 3, 2014.

    So while there may be the need for the borrower to have a legal adviser who has no other loyalty but to the borrower, is it really all that difficult? Where the difficult today applies is in Mortgagee Letters 2015-03, (which was rescinded in) 2015-12, and (then replaced by) Letter 2015-15. Except for Mortgagee Letter 2015-12, they apply to HECMs with case numbers assigned before August 4, 2015 which on its face appears to be an attempt at retroactively applying not only the Mortgagee Letter but also the RMSA itself since both Mortgagee Letters were posted in this calendar year.

  • HUD bears the burden for these situations. The law applicable at the time when this loan closed was 12 USC 1715z-20(j) which mandates that if a mortgage does not contain displacement protection as stated in that provision then HUD “…may not insure a home equity conversion mortgage under this section….” Because HUD did not want to allow non-borrowing spouses such protection did not give it the right to insure mortgages which excluded that important protection for any spouse who was then married to the borrower. It most certainly should not have created model mortgage documents to be used by lenders that ignored that requirement.

    HUD should be offering compensation for those non-borrowing spouses and their heirs who should have been protected, were not, and lost the home as a result. Instead HUD has tried to weasel its way out of its loss in court over insuring HECMs which do not contain the required displacement protection language by issuing Mortgagee Letter 2015-03 which covered all HECMs with case numbers assigned prior to August 4, 2014. While HUD has the right to change law prospectively when specific conditions are met, it has no right to do so in a manner that has any impact retroactively. HUD got so much flak over the Mortgagee Letter that it rescinded Mortgagee Letter 2015-03 in Mortgagee Letter 2015-12 and replaced Mortgagee Letter 2015-03 by Mortgagee Letter 2015-15.

    There is absolutely nothing wrong with either Mortgagee Letters 2014-22 and 2015-22 since they both only apply to HECMs with case numbers assigned after the date that each was respectively posted. HUD was smart to divide its current non-borrowing spouse rules into two separate groups so that once the courts find that Mortgagee Letter 2015-15 is an attempt at retroactive application which the RMSA (Reverse Mortgage Stabilization Act of 2013) does not specifically permit to go against the general presumption that no law (or derivative thereof) has the presumption of retroactive application unless it specifically states so.

  • The tendency of our industry is on full display in this thread. I thought that anyone who is accused is innocent until proven guilty. How do any of you in this thread (other than the wealthone and The_Cynic) know that this originator did anything more than answer the question: If we can’t get the proceeds we need this way, what can we do to get this loan? How do we know what was stated other than an ethical answer to that question or one similar to it.

    Some in this thread attack the CFPB about ads when even the model company pointed to is guilty of suggesting that it is the home that repays the loan. Yet we attack a peer without any statement from that person and no verification of the accusation made by the non-borrowing spouse. After all did the originator have any fiduciary responsibility to the non-borrowing spouse at the time of closing? The only duty that originator had was not to mislead the non-borrowing spouse and how do any of you know the originator misled her?

    We are only as strong as our weakest link. When there is pile on on one of fellow originators with no verified and confirmed evidence of any misdeed, how dare we attack!!!

  • How do we even know it was a “Bad Originator”? Has this person been interviewed to give his or her take on what transpired? All we ever get from these stories is one side, the borrowers side. What went on in counseling? What did the notary say or do? Title? What was the situation and circumstances that caused this couple to be looking into a RM to begin with? And where would they have been without one? Broke, foreclosed on? Also, is there any equity left in the house now that if she sold it she could move someplace else? To many questions. If you want to write a story and call yourself a journalist, please take the TIME and do the research. Talk to ALL parties involved, not just the ones that appear to have been mislead, that is way to easy.

  • Jon
    We only know what the borrower says now. I’ve been in the loan business a long time and I know from experience that sometimes a borrower doesn’t tell the truth or maybe just forgets what he/she was told. The circumstances may have been such that they were desperate for money and that was the only way they could get it. That being said there are very few circumstances where I would recomend one of the borrowers be taken off title so that a reverse could be obtained and if that was being contemplated I would insist that other family members or their attorney, if they had one, be in on the decision. And then I would put in writing the discussion and have it signed and witnessed.

    • Jon,

      Who cares? HUD was wrong for preventing lenders from having language in their loan documents that protected all spouses from displacement.

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