It seems to me that when a house is engulfed by a conflagration, you do not fight the fire by going from room to room. Water has to be poured on the entire blaze.
Our seniors are trying to survive a financial conflagration. Often the home value/equity will provide the "water" that is necesary to insure the financial survival of our elders. I am non-plussed when a media expert on money matters evinces a cavalier attitude toward the one tool that can unequivocably put out that fire.
These experts suggest that those old standby tools of "home selling" and "getting a conventional loan" are as effective today as they were yesterday. Clearly this is not the case. The suggestion that these tools should be used instead of (considering) the reverse mortgage, is quite frankly bad advice.
Mike Gruley, a champion fighter for this industry has heard enough from these talking heads. I urge everyone to read his cogent comments to my "Today" Show post of March 4th, 2009.
He has also created an incisive template that can be used whenever the program or this industry is maligned. His points are focused. His intent is clear: These experts should cease talking about this program if they really do not have an understanding of same. Likewise, they should stop using second nature bromides as conclusive points.
I have one question. Where is the industry outrage? Below you will find an example of such outrage put to positive use as well as a plethora of other questions.
To whom it may concern,
I watched with great disappointment the March 4th, 2009 segment entitled, "Money 911 - Smart Investing During Rough Times" with TODAY financial editor Jean Chatzky and CNBC’s Carmen Wong Ulrich. Specifically, the segment about reverse mortgages was in nearly every instance factually wrong. To summarily indicate that this type of loan is predatory and too expensive for everyone is not only irresponsible of Ms. Wong Ulrich, but damaging to those who might benefit from such a program, and who are now going to "stay away" from it after watching the piece. The constant over-simplifying of financial information and strategies on Today is not only irresponsible, it is unprofessional and damaging to viewers.
Reverse mortgages, most of them consisting of U.S. Dept. of HUD insured Home Equity Conversion Mortgages (HECM) have helped hundreds of thousands of seniors across America find a better quality of life, and in some cases avoid financial disaster. Senior homeowners that watched last Wednesday's segment may have been frightened off from a solution that thousands of seniors have found invaluable. Ms. Chatzky quotes AARP in the segment, but fails to acknowledge that AARP has been a strong supporter of reverse mortgages, and in fact AARP has worked closely with HUD and our industry to promote the growth of reverse mortgages. AARP believes in reverse mortgages...not for everyone, but certainly for some.
As a true "expert" in reverse mortgages, I resent the idea that you had three individuals discussing this topic, and it was painfully clear that neither of them had a thorough understanding of the product. They must have had time to prepare for the question ahead of time. I just can't believe they were unprepared. Just a few points of error:
1. Ms. Wong Ulrich said, "Equity will be bought up by the bank." The lender does not "buy" anything. The title remains in the name of the borrower for the entire term of the loan and the home passes to the heirs exactly the same as all other traditional loans do. Just the same as the HELOC (Home Equity Loan) that Ms. Wong Ulrich confidently endorsed.
2. Ms. Wong Ulrich indicated that the reverse mortgage takes up "20% of your equity.." Without knowing the value of the caller's home, this number could not be known. In fact, I would doubt that number is even possible in any circumstance. This is very scary stuff indeed.
3. Ms. Chatzky indicated that AARP claims that closing costs could be as high as $10,000 and that makes it expensive, and selling the home is best. My question is how much would selling the home cost when you consider Realtor fees, closing costs, and moving expenses?
As you can see, this type of over-simplification and generalization does not serve the consumer well for any financial product, and I believe as a reasonable person you would agree.
The story has run and the damage is done, but I ask that you do the right thing and revisit the story. Make a correction. Take more than 2-5 minutes on something that is life changing for many of our seniors. If you need assistance, I am available or I can get you the best representatives from our industry, AARP, or HUD. I will be glad to debate the pros and cons of reverse mortgages, not because it is good for my business, but because America's seniors are in need of reliable, honest and complete financial information - not dramatic sound bites
I hope to hear from you, and I sincerely hope you can find a way to correct the mistakes made by your panel.
Michael Gruley
Michael J. Gruley
President
First Financial Reverse Mortgages
Toll Free: 800-720-7003
Fax: 248-347-7439
mgruley@firstloans.net
www.firstloans.net
Reverse mortgage is a useful estate planning tool that banks and financial institutions ought to offer making available to seniors. It’s a great security for them to ensure the delivery of their pensions in the amounts they thought forthcoming.
Posted by: Reverse Mortgage | May 20, 2009 at 03:33 AM
Dennis,
Personally, I have never found it that hard to convince commission based “financial planners/advisors” about the value of a HECM. Too many are currently on the “prowl” investigating every avenue for new sources of funds for their “clients.”
It is very doubtful if one annuity or financial product that has been sold to seniors with reverse mortgages was completed by anyone other than someone who identified himself/herself as a “financial planner” or “financial advisor.” If there are, they are the exception. Even though there are many very responsible individuals who identify themselves with such titles, too many “predators” hide behind this “cloak.”
While I agree some need to fight the battle with the networks and the media, where are those who are taking the fight where it is equally needed -- to those who advise seniors? I have met several individuals who have attempted this but they are ill equipped for this task and largely go ignored and unsupported by the RM industry.
It is the attorneys, CPAs, real financial advisors (those who are fee based), tax advisors, and those providing paralegal services who need to be addressed. Yes, to a limited degree conventions like the one you spoke at are helpful but they are also one-time splashs with few lasting connections into the communities they are held. If my contention is correct that most of the financial planners in attendance were commission based, they have little influence on those who provide sound principled advice to seniors. NRMLA has a committee to perform this function but based on apparent inroads, it is highly ineffectual.
While a response “tactical team” is needed to address media issues, so is a grass roots style assault team for those who are the most directly influential to seniors. Many attorneys and CPAs are still running off of information that was gathered, analyzed, and disseminated over a decade ago when RMs were far less favorable to seniors.
Three months ago, I heard the President of the largest provider of continuing education on taxes in California stand up and give the same advice as Ms. Wong Ulrich but this time to over 100 tax advisors; for her, this was a rather small gathering. This individual affects the opinions of well over 10,000 tax advisors annually. Then the editor of their tax publications who is an attorney stood up and said the same thing in her segment. The editor will impact a minimum of 5,000 additional (and different) tax advisors (they rarely speak at the same gatherings) through her lectures and many, many more through her writing. This is just one group in one state.
I know the number of professionals that the President of the tax education provider and editor impact annually appear small at first, when you realize how many more people those in attendance impact annually, the numbers grow disproportionately. Further, these are only two of their entire speaker core.
Who knows what others are saying to other groups of legal, accounting, financial, and tax professionals here and in other states. One can only imagine. We need a core of originators who are professionally trained in these other disciplines to meet with and discuss RMs on a large and massive scale. Unfortunately, this could take years.
Posted by: James E. Veale, CPA, MBT | March 09, 2009 at 04:30 PM
Dennis,
Thank you for your great posts and sharing Mike's response to the CNBC Today's piece.
Mike,
Thank you so much for responding to the Today Show regarding their irresponsible piece on reverse mortgages. Using your example I too will be sending them a letter and hope other true industry experts will do so also. I think those of us who are the reverse mortgage experts need to respond more often to any negative and misrepresented information about reverse mortgages. Then hopefully the media and public will be better informed with the facts on reverse mortgages. Seniors, their families, and advisors need to know the details of this valuable financial tool in order to determine if it is right for their situation. Having the facts is the only way THEY can actually make that determination.
Again, thank you for your "template."
Beth Paterson
Executive Vice President
Prestige Mortgage, LLC, Reverse Mortgages SIDAC
651-762-9648
www.RMSIDAC.com
Posted by: Beth Paterson | March 08, 2009 at 11:29 PM