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Time Magazine: Another ignorant smear piece on reverse mortgages


Time Magazine: Ignorant Smear Piece On Reverse MortgagesI couldn’t read this “journalistic” (too use the term loosely) hit piece (Six Problems the Consumer Financial Protection Bureau Should Tackle First) and not respond. Below is my letter to the editor of Time Magazine requesting a retraction…

Dear Editor,

As a reverse mortgage professional I am writing about your publication’s recent story published July 6th highlighting reverse mortgages as one of the six problem areas that the new Consumer Financial Protection Bureau needs to address. After reading my comments I would ask that your publication publish a retraction or correction in fairness to your readers who deserve the truth. Unfortunately, such retractions are much like trying to pick up feathers scattered in the wind.

To begin, let me state that I am at a complete loss at the utter and complete lack of research, misleading statements and irresponsible reporting

exhibited in Mr Stephen Gandel’s article.Perhaps “journalists” like Stephen Gandel might consider actually researching data that has been readily available for a program that has been in existence since 1989 (HECM program began). Where did he get his so called “facts”?  It frustrates me to no end that little or no effort would be made to obtain at least rudimentary understanding of a product.

Seeing the media whip up sensationalistic and ignorant “smear” pieces is not surprising when it comes to reverse mortgages. . What is more upsetting is that irresponsible articles like this misinform the public and most importantly the seniors who read your publication who need the truth about reverse mortgages (both good and bad), not hyperbole.

Let me outline the list of inaccurate statements that should be corrected by Time in any media that this article was released in.

  1. The homeowner (senior) does not sell their house. They retain title, The bank is a lien holder.
  2. A reverse mortgage does not give the bank the right to sell the property when the borrower dies or moves out. When the borrower dies or moves out the bank gives the homeowner (or heirs) up to 12 months to repay the loan in any way they wish. They may sell the home or refinance; the choice is theirs.
  3. Reverse mortgages do not give the borrower the value of their home, minus the cost of the loan! The amount made available in the loan is prorated based on the age of the youngest borrower, the home’s value and the starting or expected interest rate. If your statement was true a reverse mortgage would be “upside down” within two short years.
  4. Reverse mortgages fees are only significantly different than traditional mortgages in the charges for upfront FHA insurance (MIP) and service set aside accounts. Did Mr Gandel bother to find out that many lender’s have waived loan origination, service fees and even are paying some or all of the upfront FHA insurance on fixed rate products?
  5. What evidence or statistics back up the claim that banks and brokers “often” abuse reverse mortgages. Perhaps “sometimes” would be a more fair and even-handed statement?
  6. Most of the time broker’s or lenders don’t have to “push seniors into taking the proceeds”…as a lump sum. It’s necessary in the majority of cases as the fixed rate product makes the most money available which is often times a must to pay off the senior’s high existing mortgage balance.

Please pass this on to Mr Gandel and I would ask that a retraction be published at your earliest convenience.


Shannon Hicks

***Update*** To write your own Letter to the Editor click on the author’s name (byline)

***Update*** July 9th 2010:

Apparently Time Has posted a “correction” about the fees since it was based on an a three-year old study. How about basing the original story on a 21 year study of the basic facts of the program?


Leave a Comment


  1. Thank you Shannon!

    I read this article this morning and was trying to find where to comment. I just read another article that was mostly positive, but still claimed that you sold your home to the bank.

    These articles do a disservice to our seniors and we need to nip these things in the bud.

    Michael Jones

  2. Shannon,
    I’m standing up and clapping for you. Perfectly put. I’ll be waiting to read the retraction and see if anyone actually does their research.

    Thanks for taking this on for all of the reverse mortgage consultants that are trying to do an honest job for our older adults in need.

    Sandy Sasser

  3. Shannon,
    Your comments reflect the attitude of the Reverse Mortgage Professionals across this great country. Ignorance and position is no excuse to mislead, in print or otherwise, the audience you wish to inform. It is time for Time Magazine and others that print or speak to be held responsible for their misinformation. Freedom of speech is one of the greatest things we have in this country, but misleading those we speak to is unacceptable. Thank you Shannon.

  4. Shannon, your wording fits the reply, in as much journalists take poetic justice in miss leading the public.

  5. I have been a reverse mortgage loan officer for overf 14 years. I want to say Bravo! Thank you for trying to set the record straight. All we need is more untruthful and negative hype from uninformed people. It would be a wonderful contribution to any article for the writer to talk to a member of NRLMA about the benefits a reverse mortgage can be for a borrower. Thanks for speaking out on this subject.

  6. Thank you Shannon and Time Magazine should humbly ask you to take over this guys job. My Mom actually turned me on to the Reverse Mortgage in investigating it herself. My sister and I gave her the thumbs up to get a Reverse Mortgage 6 years ago and I became a consultant for the Reverse. I saw first hand how it helped my Mom and she had a very knowledgeable man direct her thru the process in which this man became my mentor and now is one of my most respected friends. By educated people almost in foreclosure at the age of 80 or so, they are still living in their home today they worked so hard for in the past umpteen years and raised their kids and grand kids in. I can sleep at night knowing that I have eased the minds of many knowing there is that financial tool out there for them if they need it.

  7. Shannon,

    Way to go!

    Now how do we, as an industry, send a message to a publication as powerful as Time Magazine how wrong they are and how they must print a retraction???

    How about NRMLA, Met Life, BOA & Wells getting in this game and using their mega power to send a message!

  8. OMG Shannon~ how do these people get to write articles for major magazines and not inform the puclic with the correct information….Thank You Thank You for setting the record straight.

    Gretchen K

  9. Shannon:
    Thanks for helping all of the Seniors who benefit from the Reverse Mortgage. Those of us in the industry also tank you for your tenacity in correcting false information. This guy’s “media rambling” could cost many deserving Seniors a comfortable way of life in their later years. Keep pushing!

  10. Granted, this article, like so many that are published is ill researched and inaccurately presented. And the reporter is a disgrace to the profession. But the true culprit of this type of miscommunication is the reverse mortgage industry.

    As a business, we have fundamentally failed to communicate what it is we do. As an industry we have failed to promote clarity in the product, in the transaction and in the results we achieve. It’s time to stop whining about Consumer Reports, Time magazine and the multitude of poorly reported stories on the air and in print about reverse mortgages, grow up and act like a real business. It’s important to wrest control of the reporting from the media hacks and begin to write and report the facts about our product responsibly, with a voice of authority.

    I suppose every industry takes some time to find it’s voice, but I don’t recall mutual funds, revocable trusts or insurance annuities suffering through this type of malevolent press. We are a viable, productive service business, that does infinitely more good than harm. It’s time we told the world.

  11. and we wonder why individuals are skeptical when they are offered the opportunity to discuss reverse mortgages. These products are now so white washed & squeaky clean I find it difficult anyone can misinterpret it’s content and purpose so badly.
    Thanks for your clarifying response to them.

  12. Kudos, Shannon! Thanks for pointing the obvious to the myopic.

    • I have a variable morgtage. As a matter of fact I just moved it to another lender (paying the penalty) for a better variable rate ( 0.6 + prime to -.3 below prime) after only 1 year with our current lender (of a 5 year term). So yes I went from 2.85% to 1.95% on a 305K morgtage. For me it was worth it. My payments are exactly what they were when we started at the first lender a year ago + ago when my rate was at 4.10% (just before the decline in the interest rate). I was able to knock 7 YEARS off my ammorization in 10 months (based on the annual morgtage statement) just by leaving my payment at the higher amount while the interest rate took a dive. A fixed rate would not have allowed me to do that despite using the accelerated optoins available with fixed rates.When the interest rates increase my morgtage will be less as I have been making payments. The increase of the variable rate will establish my new payment on my current morgtage amount. So my breaking point today is different than what my breaking point will be July 1st when my mortage is $5K less than what it is now (and so on as the BoC rate changes). But point is that if interest rates literally doubled (ie; 2.25% to 5% for example) today then I might be worried but if they gradually increase then I will be fine. And I always have the option of removing the accerated option as well.

  13. THANKS SHANNON!!! I would think a writer for the Times and with all his education would adhere to basic journalistic principals of check the facts and then check the facts again and then what you checked, checked by someone else. Shame on them but Kudos to you for catching this and your great rebuttal.


  14. Wm. R. Hurst must have invested big in Time because this is” yellow journelism.”Obviously the tradition of research ing your work no longer applies.

  15. I am a HECM counselor for a large nonprofit. I concur with your comments, Mr. Hicks, and I, as well, wrote a letter to the editor. I am also a former journalist (broadcast news), and I was very surprised at Mr. Gandel’s ‘reporting.’ His misinformation and inaccuracies were disturbing to say the least, his article was certainly not “fair reporting,” it was definitely biased, and not balanced. Geez, if I remember correctly from when I started in B/C news during the Cronkite years, those were the very tenets of journalism. Maybe Mr. Gandel needs a refresher course.

  16. In Response to Carl Shadle:

    Where have you been? It seems you are doing the whining! Everyone is just applauding Shannon for taking the time to respond to this misinformation. NRMLA has recently engaged the services of a PR company that is funded by it’s members to get out the truth about Reverse Mortgages.
    This however will not stop a lazy journalist from scratching out uninformed nonsense possibly because they are under a deadline to get a story in and do not take the time to do research. This will never stop no matter how much PR we put out about our industry. Some things need to be addressed as they appear.

  17. Shannon,


    I loved your typos. They showed three things: your indignation over monstrous misinformation, your passion in demanding a retraction and rewrite, and the genuineness of your reaction.

    To all of us — As expressed earlier, much of the misinformation is due to a lack of education. While we are a small industry and have recently gotten much smaller, we must fight back with a positive campaign through NRMLA and resolve to double our own education efforts.

    As I was reminded today by a published financial planner, it is up to our industry to market the real potential of our product. We cannot sit on our collective self-proclaimed education achievements; the market still perceives our products far more detrimentally than it should. We should be so overloaded with demand that we could not possibly be able to take all of the applications. When that day arrives, we can reduce our education efforts.

  18. Slow news day? In a hurry to submit something? I was shocked to see how little you know about this product and that you were arrogant enough to call the majority of honest lenders and brokers that I know thieves.

    I am sure you will receive much mail on this subject as will your editor.

    Back in the 1930’s people like you were railing and screaming about the evils of another “new” financial product that was sure to be the downfall of civilization. That product was the fixed rate mortgage.

    Luckily people didn’t listen then and hopefully they won’t listen to the drivel you wrote.

    Shame on you.

  19. I just sent a letter to the editor. Maybe Steve needs help from one of our senior clients to explain how the product works??? I have a 90 yr old little old lady that I’m doing a loan for right now that might be able to explain how the program works…….

  20. Exactly! My clients don’t have a problem with understanding the program once I explain it to them and within 1 hour they have come to a decision or understand it enough to share it with a spouse or family member. Steve needs to read a column of a professional financial planner or the gentleman that my Mom learned about Reverse from in order to explain it to me and my sister in 2004. I became a reverse loan officer after I saw what it did for my Mom. She is my #1 fan and I give her kuddos for doing her “homework”!

  21. Time…You should really do your homework regarding the many benefits that Senior’s have enjoyed with reverse mortgages. You clearly have no clue and should educate yourself before you speak. In other words “engage brain before speaking”.

  22. It’s too bad Time and so many other so called “trusted resources” so often get the facts wrong.

    • I am just glad it is not 2010 when this kind of negative press was more prevalent.

  23. In addition to my continued frustration at the lack of truth in so many articles about reverse mortgages, I am so often insulted, on behalf of myself and the other honest, ethical, hard-working mortgage industry folks I know, by the frequent use of negative nouns, adjectives and adverbs used to describe us. There are bad apples in any barrel; we all know that. But we as a group are extremely well educated, tested, and regulated in order to perform our jobs well, not only within the law, but also within the confines of moral and ethical behavior. It is unfortunate that journalists are not held to the same rigorous standards as we are.

    Thank you, Shannon, for setting the record straight. It will be a very sad commentary if Time Magazine does not publish it.

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  25. Great article Shannon. Thanks from all in the Industry for your efforts to set them straight and try to prevent such misleading info from being disseminated to the Public.

  26. Hey Shannon…

    I think I’m rubbing off on you… LOL.

    Martin Andelman
    Mandelman Matters

    • Thank you Martin! Lighting the fire of truth is a worthwhile endeavor. Keep up your great work on your blog!

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