USA Today Publishes Industry Op-Ed on Reverse Mortgage Report

A rebuttal to an investigative article released this week by USA Today has been published in the form of an editorial also released in the national news outlet, written by the Chief Executive Officer of the National Reverse Mortgage Lenders Association (NRMLA).

In the editorial, titled “A reverse mortgage can be a lifesaver,” Peter Bell describes refinements made to the Home Equity Conversion Mortgage (HECM) program that are not detailed in the investigative article, while also detailing that in certain situations, a reverse mortgage can provide a proverbial lifeline for retirees with insufficient savings or benefit payments to meet their expenses.

“A reverse mortgage loan can be a lifesaver, particularly for those in need of cash with few options, as there are no monthly payments and nominal income requirements,” Bell writes. “The reverse mortgage enables them to pay off credit card debt, medical bills and other daily expenses. However, as with all property ownership, the owner is responsible for paying taxes.”

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The original investigation also overlooks that foreclosure is often the typical resolution to a reverse mortgage transaction after the borrower passes away, Bell explains.

“Few result in actual displacement,” Bell writes about reverse mortgage foreclosures. “If the balance due exceeds the home’s value, or there is no next of kin to handle a sale, the estate will simply allow the home to go into foreclosure.”

Engaging in a reverse mortgage transaction also constitutes a major financial decision on the part of a prospective borrower. It should be made in consultation with knowledgeable professionals and any family members who may be impacted, and is ideally one part of a larger financial plan, Bell says.

“Lenders never want to make loans that will default,” Bell writes. “We’ll continue working with federal regulators and counseling agencies to ensure borrowers and lenders understand the important responsibilities each has in a reverse mortgage transaction.”

Shortly after the publication of Bell’s editorial, NRMLA sent an email newsletter to its members saying that a copy of the rebuttal would be provided to them, which happened shortly thereafter. The trade association also advises its members to “comment on the entire package of stories published as part of the investigation,” the email reads.

NRMLA members are also advised to download copies of the association’s existing consumer guides and to share them with clients and their family members, which touch on topics that include what a borrower should know about their HECM after closing; what to do when a loan becomes due; and a checklist of key reverse mortgage considerations.

Read the rebuttal written by the NRMLA CEO at USA Today.

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  • Intentional or not, the original article discredited the product, the origination process, lenders, servicers, and to a great degree the efforts of HUD to protect consumers. Much of the data seems plausible but is written to stir negative reactions to the industry and its products. While a response dripping with factual counterpoints might be effective, we do not have sufficient fact checkers to separate fact from exaggeration in time to make a meaningful and timely response.

    While many of us would love to have seen a harsher and more vigorous rebuttal, Mr. Bell’s response is measured and barely confrontational. While some may question its effectiveness, it is more than adequate to meet the need in this situation. So I, for one, support Mr. Bell’s milder style rebuttal.

    The problem is few USA Today readers who have read or will read the article will read any rebuttal to it. Then comes the many derivatives of this article which are even harder to address. It is all but impossible to respond to these articles in a timely manner unless the newspaper requires a heads up to the party being “exposed” in the article before publication which does not seem to be the policy of US Today (or many other publications).

    With the expectation that endorsements will not exceed 35,000 for the fiscal year 2019, articles attacking the industry in June 2019 are most likely to impact the endorsements for fiscal 2020 based on the four month lag rule of thumb that says it takes four months for the average endorsed HECM to go from case number assignment to endorsement. While we can expect to see some impact from the article, it will most likely be seen in lower case numbers assigned for the remainder of June 2019 forward and lower related endorsements that will begin in October 2019 forward.

    How long the article will remain in the memories of the public is hard to say. Let us hope the rebuttal will go a long way towards cooling down the impact of the original article.

  • Incredibly, USA Today included an ‘opposing view’ editorial to counter Peter Bell’s contribution, and it was as misinformed as the original article. To wit: “What’s more, if the value of a property drops below the value of the loan, the lenders have taxpayer-based Federal Housing Administration insurance to make up the difference.”

    It would be interesting to know just what ax it is that USA Today has to grind here…but perhaps it is obvious.

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