Washington Post: Reader comments on Reverse Mortgages

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The Washington Post shares reverse mortgage borrower experiences

The Washington Post shares two select reader experiences in applying for a reverse mortgage. Do you think at least one had a positive impression?

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The Critic June 7, 2021 at 11:26 am

If the majority of WP (Washington Post) readers were for RMs (reverse mortgages), do you think WP would be so prone to select reader comments that are less favorable to RMs? That seems very doubtful. Whose fault is poor RM perception? Our ads may help sales but they do not always increase our credibility with consumers.

It is the job of WP writers to sell WP newspapers, not RMs nor is it Shannon’s job to criticize the industry. Guess whose job it is to sell the value of RMs to the public? The real issue is why interested seniors walk away from their experiences with us with such negative views of RMs? Are we really telling prospects that the upfront costs of a HECM are $15,000 on a $200,000 home when the upfront FHA MIP is just $4,000 and the maximum origination fee on a $200,000 home has NOT been greater than $4,000 in at least 18 years? So are we really charging $7,000 in so called “junk fees?” That hardly seems reasonably but so far too many of us talk.

The WP writer made a fairly good summary of RMs; YET the writer says that the ongoing cost that the borrower must pay out of pocket are real estate taxes. Why? I have yet to hear a single reverse mortgage originator declare that they failed to make it clear to prospects what the ongoing out of the pocket costs of a prospect will be. To get so much right about RMs, the writer must have talked with someone knowledgeable about RMs. I doubt if that person will ever admit who he or she is. With so much right about RMs, how did the writer exclude homeowners’ insurance and ongoing home maintenance from ongoing out of the pocket costs of the borrower? But that is but a sample of such costs. What about HOA dues and fees, septic tank costs, well repairs, payments on long-term land leases, and so on?

When seniors complained a decade ago about not being informed about their ongoing out of the pocket costs, many originators chalked that up to forgetting or seniors looking for a fall guy. Yet here is a WP writer who gets so much right about RMs but declares that seniors are only responsible on an ongoing basis ou of pocket for real estate taxes. Dare anyone say that perhaps one of our own described a RM to the writer…?

Perhaps we would see less attacks on our ad practices, if we stopped making silly claims such as with a RM the house pays YOU or how RM debt proceeds are income that is not subject to tax because they are not taxable income? Who provides the cash to or for borrowers? Lenders through their agents whom we call servicers. As to the silly misleading talk about income, the proceeds of a RM are not income since they accrue interest (and with HECMs, MIP) AND must be REPAID; they are DEBT proceeds.

Our troubles with false and misleading ads are our OWN.

Next is the value of H4P to SELLERS. H4Ps are far less useful than we claim. What if the living situation Shannon described was a coop? Or what if the seller of the unit was receiving excellent all cash deals? An H4P is generally an awful offer from a seller’s standpoint in theses situations, even when the H4P prospect’s offer is somewhat better than the all cash offers. Like a friend of mine who is closing on an H4P deal, the longer it takes the more antsy the seller becomes as the seller keeps hearing that the home has already appreciated by at least 5% (the house is in Newport Beach CA.area) since the financing process started. Then there are the HOAs that are dead set against HECMs, period. Just look at Leisure World in Laguna Woods, CA.

We do not need our ears tickled or breaking our arms trying to pat our own backs, we just need to be out there making the situation better for all of us.

Michael Friedman June 9, 2021 at 6:09 am

Shannon, I live 15 minutes from Ann’s choice. Great facility. But you are correct. If they only knew about H4P. Hecm for purchase. Soo many older adults are unaware of the program. Sad, but true.


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