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All that USA Today got wrong about reverse mortgages

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A rebuttal to USA Today’s recent expose/editorial on reverse mortgages

If there’s one thing many media outlets practice it is selective reporting of facts, willful omission, dividing Americans by race or economic class, and fear-mongering to garner clicks to increase ad revenues. Such are the criticisms that come to mind when reading USA Today’s most recent expose on reverse mortgages. Sadly such journalistic practices are not uncommon…


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  1. Hi Shannon, your comments this morning regarding the USA TODAY article were EXCELLENT. It’s a shame that articles like that are allowed to be printed for public consumption.

    Keep up your great work.

  2. Excellent response, Shannon! Now to just get the media to do more responsible reporting by doing their research and sharing the facts. Unfortunately sensationalism is what sells their publications so it seems they don’t want to provide accurate stories.

  3. Thanks, Shannon, for your skillful ferreting out some of the more repugnant accusations and making a clear response.

    I want to focus on a few terms and ideas presented in the article. Unless otherwise stated, the reverse mortgages discussed in this comment are ONLY FHA insured reverse mortgages known commonly as HECMs.

    The first word is found in the first paragraph, “blindsiding.” Yet this is the only mortgage that requires the borrower to take counseling given by a person who is not connected to the lender, who has passed an examination overseen by HUD, meets other HUD qualifications, and is an employee of a qualified non-profit credit agency also approved by HUD. To receive a certificate of HECM counseling, the counselee must get a percentage of the answers to a few simple questions regarding the loan correct. If this were the ONLY means of communicating the terms and nature of this mortgage then perhaps people are right to say we are blindsiding them but the originator is required to discuss the loan with the borrower and find the HECM that reasonably meets the needs and desire of the borrower. The originator is also required to discuss all HECMs available to the borrower. Finally, HUD approves the loan and its documents at endorsement; therefore, most lenders use the boiler plate loan documents provided by HUD and add any additional disclosure requirements mandated by the state or jurisdiction where the collateral is located. So the borrower goes through (1) originator presentation(s), (2) counseling through an independent third party counselor (to both borrower and lender), (3) loan signing using HUD boiler plate documents and other required disclosures both at (A) application and (B) loan closing. As to loan closing, borrowers have three days to rescind the loan if they want. How is that blindsiding the borrower?

    As to blindsiding relatives of the borrower, no mortgage requires that children or any other relatives who are not also borrowers (or currently homeowners) be informed of a mortgage. The reason is that the borrowers should be free to bring any relatives they want into the loan process or leave them out by their choice and their choice alone.

    Then on a different subject, little of the information provided about Mr. Roebuck makes any sense. If there were as much available in the line of credit as alluded to in the article then why would there be $20,000 causing foreclosure? Wouldn’t the sevicer simply have paid for those costs by using the line of credit?

    Then we come to the HECMs in the MMIF. Yes, the cumulative losses are almost $14 billion net of its other assets and liabilities BUT neither HUD nor the US Treasury are the primary guarantor on HECMs. The net assets in the MMIF from other mortgages is almost $50 billion. So if the losses had to be paid today, neither the US Treasury nor US Taxpayers would have one penny at risk. Right now the profit reserves from the other mortgage programs found in the MMIF would be sufficient to cover the $14 billion HECM cumulative loss situation!!

    In the world of HECMs foreclosures mainly happen because of the death of the last surviving borrower and there was no or insufficient actions from any heir, beneficiary or other party receiving title in the property following the death of the last surviving borrower. Indeed eviction normally occurs where the source of the default was something other than the death of the last surviving borrower.

    As to the comments of Ms. Jolley, her conclusions are questionable at best. She simply does not want to acknowledge how nonrecourse mortgages work where the only collateral is the principal residence of the borrower. And not all foreclosures end in losses to the title holder although the vast majority do. It is also true that homes are sold or the HECM is paid off by the actions of the subsequent titleholder.

    The researchers claim that lenders appraise the value of the home in their discussion of how a HECM works. Yet that is factually wrong and very misleading. HUD requires that an appraiser who is not connected to the lender and is part of an AMC which is approved by HUD perform the appraisal.

    Since this could just keep going on, I must end this comment here.

  4. You nailed it, Shannon. The silver lining is that professionals have passionately come to the defense of this great product. Well done, sir.

  5. And as I was about to write I rebuttal to this article, I see a HECM World with a link to this wonderful video.
    As Dan said, well done, Sir!

  6. As always, you represent the Reverse Mortgage industry like the champion you are Shannon!
    Huge kudos!

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