Consumer Reports Continues its Specious Attacks on the HECM Reverse Mortgage Program. All We Ask is That You Just Get the Facts Right

I have found it quite disheartening how much of the media in this country no longer considers facts when reporting on issues.  This view is particularly true when the subject matter is reverse mortgages. For some reason, this topic is treated as if it was a fly that needed to be constantly swatted at.

I have vehemently stated beforethat the program has been subject to harsh and misguided invectives, by reporting that merely repeats  old worn out general talking points that are no longer issues. Relatively new legislative and or policy changes have already taken affect and have made these prior arguments moot. This new article falls into this category. And like most articles of this genre, they are grossly misleading.  Each has a Wizard of Oz-like quality. Reporters write about a program that remains unrecognizable to those in the industry.

The authors paint a picture of a nefarious industry swooping down on unsuspecting prey. The accomplishments of this industry are many and quite significant and are totally ignored by this piece; the industry is working closely with legislative leaders in Washington DC and around the country, as states craft reverse mortgage bills of all shapes and sizes.

The article should be seen for what it is-a quintessential hatchet job on a program that already has significant governmental oversight. The industry is and has always looked to improve itself.

There are significant industry successes and failings which the article ignores. I'll leave it to the authors to figure that out.  Industry-wide there is still no voice that is heard over the crescendo of media babble. This continues to be a major problem for an industry that is begging to be understood.
 

 

Comments

[James E. Veale, CPA MBT]

The latest action by the Consumer Union seems much more sinister and complicated than merely rehashing old discredited issues for public consumption. The recommendations were not addressed to the public but as stated on Page 30 of the report: “We urge the newly developing Consumer Financial Protection Bureau and other federal and state regulators to consider our findings and to include our recommendations in developing strong and comprehensive policies to protect the public against abuses in the reverse mortgage marketplace.”

Perhaps some are not familiar with the Consumer Financial Protection Bureau (“CFPB”) or the individual who both President Obama and Treasury Secretary Geithner credit as its architect, Ms. Elizabeth Warren. The Dodd-Frank Financial Reform Act of 2010 mandates the formation of the CFPB under the Fed. The Act also requires a report from the CFPB on reverse mortgages within 12 months following the appointment of and the coming on board of the first CFPB Director. Because it was commonly known that the Senate would not confirm her as the first CFPB Director, the President appointed Ms. Warren as a Special Assistant to the President and a Special Advisor to the Treasury Secretary to oversee the formation of the CFPB and its early operations.

In discussing Ms. Warren, Mr. Frank Kautz, II, a staff attorney and reverse mortgage counselor with Consumer Service Network, Inc. makes the following statement on December 14, 2010 in a comment on Reverse Mortgage Daily: “Good luck getting Ms Warren's ear…. Ms. Warren comes from the National Consumer Law Center. I will also say that I have spoken with Ms. Warren several times on this topic, she is not fond of Reverse Mortgages. She can see the necessary evil in them occasionally, but do not put your hopes in her help. She is far more likely to follow what the folks from California have said than anything that the mortgage industry wants.”

On December 16, 2010, Mr. Kautz added: “While Ms. Warren did not have a paying position there, she has worked on a large number of their books, both with and without credit. Ms. Warren was also a fixture at NCLC conferences and was always available to members of the National Association of Consumer Attorneys. She is first, last, and at every point in between an activist.”

The National Consumer Law Center (“NCLC”) is the group which in October 2009 published the booklet titled: “Subprime Revisited: How Reverse Mortgage Lenders Put Older Homeowners’ Equity at Risk.” The NCLC quotes Ms. Warren in the bookstore section of their website as saying: "NCLC has been the go-to resource on consumer credit, collections, bankruptcy and sales for more than 40 years."

On September 16, 2010, Kevin G. Hall reported on mcclatchydc.com that NCLC declared the following: "‘We at the National Consumer Law Center have worked with Elizabeth Warren for years and are excited that she will be instrumental in setting the course for the Consumer Financial Protection Bureau. Elizabeth has a deep understanding of the needs of consumers and the ways in which the financial system has let them down,’ the advocacy group said in a statement.”

It seems as if the CFPB report will be poisoned before it begins. I hope all of the foregoing is little more than a cynical overreach. If not, NRMLA and all of the rest of us will be busy fighting discredited information which is not only published by those who oppose reverse mortgages but also from a supposedly neutral government bureau.

In some circles what could be going on between the CFPB, the Consumer Union, and the NCLC is referred to as “perpetual cross pollination.”