One can always discern the bias of an article from the introductory remarks. While the article acknowledges that seniors are living longer, it goes on to suggest that reverse mortgages are "often expensive and unnecessary." The reporter ( I use this word begrudgingly) continues, "Though reverse mortgages have their place, it is a rare one. Be cautious."
The financial planners that were interviewed urge creative solutions like selling the home to the kids. How many kids are in a position to entertain such a transaction. Many of the adult children have lost their jobs. Maybe such a transaction would work one in 10,000 times. Urging a solution that has infrequent application and relevance is sheer folly. Though selling to the kids have their place, to use author Alexandra Zendrian's words, it is a rare one. The government along with AARP created the model reverse mortgage program back in the eighties because it was utilitarian. It did not create the program because it would help on that rare occasion.
Ms Zendrian does not stop there. It is also suggested that it is a loan of last resort. All other options should be pursued. Do you know what she is talking about? Let's see if we can figure that out. Well, seniors generally wish to remain in their home. Although about 90% want to remain there, maybe that shouldn't be allowed. Maybe Forbes is on to something- Require all seniors to sell the home!!!! The problem is that the market is saturated. This is not generally a viable option.
Requiring all seniors to get a conventional/FHA mortgage- now that's another sound answer. Opps. Someone forgot to tell the financial planner that banks are not lending. And stricter underwriting requirements will preclude most seniors from going this route.
Let's require that seniors move in with family. The only problem is that many of the adult children have lost their jobs and are struggling along with their family. In fact, many of the adult children are moving back home with their spouse and children.
Here is a question: What does one have to see to concede that a reverse mortgage is a wonderful tool for those who have decided that remaining in the home represents the best option?
I did not respond to the original article because after seeing other fatuous, nonsensical stories, one starts to become desensitized to the inaccurate portrayal of a program that is so beneficial. Those of us in the field know how lives are changed for the better because we do the work we do.
I would invite Ms.Zendrian to visit with me and my clients. Forbes is a major publication. I would like them to see what the reverse mortgage world is all about. While it is correct to say that the program is not for everyone, it is not correct to say that it is inappropriate for everyone.
When Reverse Mortgage Daily ran a piece on this article and Sam Collins talked about it in our interview this afternoon, I was chagrined that I had not responded to this piece. As a writer, one sometimes gets the disheartening feeling that the messages are just not be heeded.
The sardonic tone comes from a weariness of reading misleading, harmful and incendiary pieces of journalism that wrongly influence advisors' perception of the program and industry. The examples of accurate portrayals is not offset by the inaccurate ones. Rather, the 180 degree tone difference has a "chilling affect" upon the use of the program. A mental paralysis is manifested by the advisor. The advisor circumvents the issue with the client because he/she is unsure what to tell the client. The client is affected in a similar way. The client becomes frozen with "action paralysis" and does nothing, even though the program may be the answer to solving their troubles.
No financial or mortgage program is 100% good. There are always plusses and minuses, advantages and disadvantages, and positives and negatives. It seems to me that a prestigious publication like Forbes would want to get to the core of the program instead of focusing on superficial banalities.
Hello Dennis,
As usual you did a great job in re-framing what they should have been looking at and asking themselves why their solutions were so far off base!
Posted by: Greg King | December 16, 2009 at 10:42 PM