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.”
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.