ABC Action News: Reverse Mortgages Have Changed for the Better

Reverse mortgages may have suffered from negative perceptions over the years, but program updates have since changed these financial products for the better, according to ABC Action News Tampa.

“The reverse mortgage’s reputation suffered hits over the years for high interest rates and sad stories of people who ended up worse off,” said ABC Action News correspondent Jackie Callaway in a recent television segment.

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ABC interviews Mac Tennant of St. Petersburg, Fla.-based Access Reverse Mortgage, who described some situations that may have contributed to the blemishes on the reverse mortgage’s reputation.

“People who were used to living more or less paycheck-to-paycheck all of a sudden had $100,000 or $200,000 in the bank, and there were some tragedies obviously when that happened,” Tennant said.

But program changes that curb the upfront draw to 60% of the principal limit in the first year of borrowing, among other updates in the past few years, have helped reverse mortgages improve its reputation, suggests ABC Action News. The article, however, did not explicitly mention the recent rules under the Financial Assessment, such as credit and income underwriting requirements.

“I would highly recommend it,” said Joan Helmich, who was interviewed in the segment and who, along with her husband, settled on a reverse mortgage to help them with their monthly $2,000 house payment. “Just the equity that was in the house when it went into the reverse mortgage—it’s like a load off your shoulders, and it’s good.”

View the ABC Action News segment.

Written by Jason Oliva

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  • “When we die, the house goes to the mortgage company,” Mrs. Helmich states.

    For all of the education Mrs. Helmich received, the ownership of the house following the death of the surviving spouse using the home as a principal residence is not stated as following normal inheritance law but rather “the house goes to the mortgage company.”

    That short quotation presents a combination fatalistic but optimistic view of the termination of a reverse mortgage. As to fatalism, the mortgage company will get the house BUT as to optimism, the reverse mortgage will still be active when the surviving spouse passes away.

    The truth is the segment does little to dispel the idea that a reverse mortgage is anything other than a loan of last resort. Nor does it dispel the idea that most such testimonials come during the honeymoon period of the loan, not its final disposition. It also does little to dispel the idea that borrowers are evangelized (in an Elmer Gantry type evangelism) into getting the HECM rather than the decision springing forth based on a thorough education and UNDERSTANDING of the most significant features of the reverse mortgage as a mortgage and the best alternatives available to them other than a reverse mortgage based on their facts and circumstances.

    While the segment is very positive, it has too much of a honeymoon tone to it; it is both fatalistic and optimistic as to the termination of a reverse mortgage; and it once again sounds more like a loan of last resort rather than one of the crowning features of a carefully put together retirement plan.

    So while NRMLA can once again count this ad as positive, can it be counted as the image the industry really is trying to cultivate or is it simply a byproduct of our past?

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