Right after I posted about Good Morning America doing a positive piece on reverse mortgages, the folks at Nightline decided air something negative. The story Back-Stabbed by reverse mortgages? aired Thursday night and judging from the title you can guess it didn’t have a positive spin.
Tom Costello reported on a woman who recently took out a reverse mortgage and is now suing the lender and broker for taking advantage of her. According to the video, the woman was sold a reverse mortgage as well as a long term annuity product that doesn’t mature until 2033 by the same individual. The woman claims that all she needed the money for was to fix her porch but the salesman told her to buy a car, go on vacation, ect. So who is to blame here?
Obviously the annuity product wasn’t the best choice for the woman and the reverse mortgage enabled her to purchase the product… does that mean the reverse mortgage is to blame? I don’t think so. Recently I’ve been hearing more about people selling reverse mortgages and insurance products and it does raise some concerns. While I’m sure not everyone that offers both products are taking advantage of customers, does our industry need to take more of a role in making sure it doesn’t happen? I think so, but how?
I thought RMD could be a good sounding board for some ideas from the readers… feel free to comment below!