Forbes: AAG’s Jahangiri Has ‘Answer’ to America’s Retirement Question

American Advisors Group CEO Reza Jahangiri has the key to a comfortable retirement for the nation’s rapidly aging population, but no one’s listening — at least according to an upbeat profile in an upcoming edition of Forbes magazine.

Posted early online, the Forbes piece tracks Jahangiri and AAG’s improbable rise to the top of the Home Equity Conversion Mortgage industry, from the $750,000 personal loan he gave the company in 2007 to its most recent ad campaign starring actor Tom Selleck.

In the process, Forbes writer Lauren Gensler explains the more recent thinking on reverse mortgages, quoting MIT professor Robert Merton and noted HECM proponent Wade Pfau while tracking the reverse mortgage’s evolution from industry black sheep to novel retirement funding idea.

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But Gensler also focuses on the challenges that even an industry leader like AAG faces when trying to convince seniors that home equity could be a smart solution for their retirement issues. While 500,000 people called the Orange, Calif.-based lender’s 800 number in 2016, only about 9,000 of those actually went through with receiving a HECM, Forbes reported, with large chunks of seniors either failing to qualify or balking at the high closing costs.

“We’re trying to give people financial stability through an underutilized asset,” Jahangiri told Forbes. “But it’s an uphill battle, and there’s still a perception issue.”

Still, Gensler generally offers a positive view of AAG and the HECM program in general, explaining common methods of using a reverse mortgage to a retiree’s advantage, such as taking out a HECM line of credit early and allowing it to grow, or using reverse mortgage proceeds to delay receiving Social Security benefits until they reach higher amounts.

“Reverse mortgages are no longer a last resort for desperate homeowner,” Gensler writes. “Future growth depends on whether the middle class is ready to use their home equity to finance retirement.”

Read the full profile at Forbes.

Written by Alex Spanko

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  • “Future growth depends on whether the middle class is ready to use their home equity to finance retirement.”

    Ready or not, the middle class is woefully unprepared for retirement and they will have no choice.

    • REVGUYJIM,

      No is saying you are wrong but certainly “ready or not” seems a little premature. It is HIGHLY unlikely we will go from 48,900 endorsements to 100,000 endorsements.

      The largest percent growth the industry has seen is going from 389 endorsements to 1,016 in fiscal 1992 when just growth was over 160%; however, since first reaching over 40,000 endorsements in a single fiscal year (fiscal 2005), the highest percentage growth we have seen for a fiscal year is fiscal 2006 which had an increase of 77%. Since then the largest percentage growth was just 40% in fiscal 2007. Right now we would be fortunate to see a year of growth exceeding 20%.

      Your seeming short-term prediction, will not occur until AT LEAST the first part of the next decade about 5 years from now but highly unlikely before then.

  • Congratulations to Mr. Jahangiri for his tenacity, vision, and follow through and Jacobs Asset Management for financially taking the largest stake in the company over the last 8 years. It is clear that this financial marriage has been quite successful.

  • Good article here and at Forbes,

    Has any progress been made to re-introduce the “spot” approval for condo owners for non-FHA approved condo projects?I have not heard anything encouraging as to the Trump administration ‘s position on allowing individual owners to apply for reverse mortgages.

    Also, I have heard that some mortgage brokers will take on individual high-end condo owner without the “Spot” approval. I am not sure what qualifies as “high-end” but my condo project is definitely high end for Milwaukee suburban. These sell for $450,0000, feature finished basement, Total living space is 3200 sq ft, 10-foot ceilings, granite counter-tops. 2 full baths, 3 bedrooms, 2 fireplaces. What prevents our condo association from applying for FHA approval is a bylaw that prohibits any rental of any unit for any length of time. But the board and builder will not budge on any revision to permit it.

    Any response is appreciated. I can be reached at rkrowas@wi.rr.com. Thank you.

    Bob Krowas

  • Has any progress been made to re-introduce the “Spot” approval for condo owners in non-FHA approved associations?

    Also, I have heard that some mortgage brokers will process reverse mortgages on so-called “high-end” condo owners whose association is not FHA approved.I am not sure what qualifies as high-end”, but our condo is in suburban Milwaukee, current sales are $450,000 per unit (2-unit ranches). It features 3200 sq ft, including finished basement,10 foot ceilings, granite counter-tops, 2 fireplaces,3 bedrooms, 3 full bathrooms.

    Our condo association is against getting FHA approval; in fact, the only requirement that would prevent FHA approval is a bylaw that says there shall be no rental of any unit for any length of time. But the board and builder will not budge to amend it and apply for FHA
    approval.

    We are in our mid-70s, moved into our brand new condo almost 3 years ago, and have under 4% mortgage of $47,000. Any mortgage broker interested can email me rkrowas@wi.rr.com, or call 414-529-3886.

    Thank you,

    Bob

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