Carlsbad, CA

Monday, October 26, 2009

Gary Weiss, an investigative reporter, wrote a highly defamatory and lightly researched article entitled "Beware of Reverse Mortgages" published in Parade Magazine on October 25th. He is using this highly read and well-respected media for his scare tactic directed at seniors. (In order for someone to take out a reverse mortgage, they must be at least 62 years old.) The vast majority (90% plus) of seniors who have taken out a FHA/HUD insured reverse mortgage are actually very happy that they did it.

Mr. Weiss uses the term 'spate of fraud' when the record shows otherwise. He used 'host of' to represent the number of loan officers, mortgage companies and even AARP trained counselors he categorized as being 'unscrupulous'. There have been instances where loan officers and others have taken advantage of seniors. However, it certainly is not a widespread practice. As Weiss does point out, more than 335,000 seniors have taken advantage of this product in the past 3 years. Nowhere in his blurb does he cite any degree of dissatisfaction among seniors who have taken out one of these loans.

He points out that consumer advocates have long cited 'excessive fees' as a reason not to do a reverse mortgage. As it turns out, these fees have not proven to be so as FHA/HUD now estimates that the mortgage insurance pool will be short primarily due to the fall in home values. The single largest fee is the 2% of the home value (up to $625,500) for the Government's mortgage insurance premium. Many seniors who listened to these consumer advocates took out conventional loans where payments had to be made on a monthly basis. After a period of time, they have found that they cannot afford the payments on these 'low cost' loans and turn to reverse mortgage specialists for help. Unfortunately, with the drop in home values, many no longer qualify and will lose their homes. Had a senior taken out a reverse mortgage in the first place there would be no monthly payments to worry about as long as the senior resides in his or her home.

Mr. Weiss does not live in the real world. He suggests that low cost alternatives to a reverse mortgage include selling your home and moving to a 'smaller place' or taking on a home-equity line of credit. Even to suggest that a senior, given the fallen price in home values, sell his or her home is ludicrous. Parade should do a far better job of determining who should write "Intelligence Reports" for them as evidenced by this totally biased and sorely misinformed reporter. See Parade.com/intel in order to view this acticle.

Ken Keranen

Carlsbad, CA

800-747-8006