Reverse Mortgage Information

So you’ve been watching a little too much cable TV lately… and noticed more former movie stars, TV personalities and ex-politicians urging you to call for a free DVD/CD that tells everything you ever needed to know about reverse mortgages.  Robert Wagner has been hustling these “free discs” for years… adroitly switching company sponsorship without missing a beat. Now his daughter, Katie, has joined the ad campaign to emphasize involving family members in your decision. Few people, however, can actually identify what company he presently sponsors.  Jerry Orbach, deceased star of Law and Order, was the original spokesperson but Wagner is king today.  New spokesman include Fred Thomson, Henry Winkler and even Pat Boone. Shortly you will see Barbara Eden of “I dream of Jeanie” fame pushing the “free DVD/CD”.

What happens when you call for the free information? A polite person in a call center somewhere takes your name, address and phone number with a promise to send the package out as soon as possible.  Usually you will be subjected to additional questioning in an effort to “qualify” you for the reverse mortgage.  If you resist supplying that personal detail, don’t worry. You will still get the info package and the free disc from the call center.

FHA recently made changes to lender requirements that could mean expansion of these revere mortgage call center operations.  I’m not certain any of this process is a good thing for senior borrowers.  Representatives of Robert Wagner, Fred Thomson and/or Henry Winkler could soon be calling you at dinner time or in the late evening if you innocently respond to these slick cable TV ads targeted specifically to senior homeowners. Be forwarned! You will be targeted for telemarketing calls

Free Reverse Mortgage Info?

“Call now and get a free DVD about reverse mortgages…” is the common message.  Reality,  is that the TV advertisers are simply looking to identify you as a sales prospect… and obtain your name and phone number.  Telephone calls to “follow up” will soon come pouring in from sales people in call centers around the country.  Sometimes these “leads” (your information) are sold to other companies/brokers and sometimes the call center is operated strictly for the benefit of the sponsoring lender that placed the TV ads. Many clients tell me that these annoying phone calls to them are made repeatedly day after day for months.

Questions To Ask Reverse Mortgage Phone Callers

A face-to-face meeting with a local, experienced reverse mortgage professional (5 years or more as a specialist in the product) is a far better source of information.  But if you do make a conscious decision to speak with these call center personnel, here are a few questions to ask before you ever begin to reveal your confidential information:

1 – Are you personally licensed by (state where you reside) to originate reverse mortgage loans in (your state)?

2 – What is your National Mortgage Licensing System (NMLS) ID number?

3 – What is the name of the lender you represent and what state are you presently calling me from?

4 – How long have you been originating reverse mortgages?

5 – Are you personally willing to meet with me face-to-face in my home to provide information and answer questions about reverse mortgages?

Listen To Reverse Mortgage Call Center Answers

Pay close attention to exactly how these questions are answered.  If the answers are deflected in any way, let that be a warning sign.  For example, a phone center sales person might respond to question #1 above with a reply such as “My company is permitted to operate in all 50 states”.  That response dodges the question. You want to know if the person you are speaking with is specifically licensed in your state. Do you really want to deal with someone who will not honestly respond to a specific and direct question?

Armed with a response to question #2 above, go to the internet to NMLS Consumer Acces and plug in that ID number to learn who the person actually represents, exactly where they are licensed plus other significant details about their background. If licensed in Massachusetts, they have been required to pass a C.O.R.I. criminal records background investigation plus a credit check. You are, therefore, reasonably certain that you are not dealing with a felon… or with an individual with a history of personal financial difficulties. You certainly don’t want people of this character providing financial advice to you.

Question #4 above is obvious. Many of the call center operators are young enough to be your grandchild. There is nothing wrong with being young… but somebody your own age probably knows how to relate to you much better and understand your issues/situation(s).  I love my grandchildren very much…. but I don’t want their advice when making significant financial decisions.

The most important question might be #5 above.  If the caller is (a.) unwilling/ unable to come to my home to discuss details of the complex reverse mortgage product, (b.) answer my questions face-to-face and (c.) provide an opportunity for me to size them up in person… why would I ever want to do business with them? What will I do when I run into a problem during loan processing, or several years later when an issue pops up?  Will they still be around or will they have moved on to selling used cars or insurance.  Be careful who you deal with… it’s your own home that’s at stake.

Author – Robert H. Irving, CSA®
Senior Reverse Mortgage Consultant – NMLS #19086

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DISCLAIMER: The information presented in this blog is accurate and correct to the very best of our ability. We are not legal experts and we do not attempt to give legal advice. If you think we report something inaccurate, please let us know right away. If we write something you like, let us know about that, as well. Tell a friend or link to the site.

COPYRIGHT 2011: All posts are copyrighted by Robert H. Irving. You may link to any post as long as you properly credit the author and this blog. Thank you

This is not a post about how terrible things might happen if you do a reverse mortgage.  If that’s your thinking about the popular Home Equity Conversion Mortgage (HECM) product, see the typical news media 15-second analysis recently screened on CNN (see CNN Wrong on Reverse Mortgages…Again).

But… you should know that storm clouds are gathering on the horizon for reverse mortgages.  If you have been thinking about the possibility of doing a reverse mortgage you really need to seize the moment and educate yourself.  Don’t depend upon Robert Wagner (see Robert Wagner… He’s Back !!!) or Fred Thomson to teach you the pros & cons.  Get aligned quickly with a professional loan specialist with at least 5 years direct experience in the reverse mortgage industry.  I emphasize the words “direct experience”.   Don’t bother with people who tout “30 years of loan experience” – reverse mortgage lending is unique and a recognized specialty.  Any experience in the conventional mortgage industry is meaningless.  These people are simply trying to learn the complex business at your expense. You don’t need to work with amateurs. For more information on how to find a professional see Choosing a Reverse Mortgage Loan Officer – Part I

Reverse Mortgage Warning #1

Financial Freedom and Bank of America recently decided to exit the reverse mortgage lending industry.  These organizations were number two and number three respectively in the business.   Each lender represented thousands of HECM loans originated every month.  Now… the bombshell !  Wells Fargo has just announced that they, too, will exit this business immediately.  WF has been number one in the industry for many years… with more than 1,500 originators and staff dedicated exclusively to reverse mortgage production.  They were always the elephant in the room with 26% market share…head and shoulders above anyone else.  So in the last 12 months we have seen the top three (3) leaders in the market leave the business entirely.  They did not sellout to someone else… they quit the industry.  This can’t be a good thing.

Reverse Mortgage Warning #2

The current temporary lending limit on reverse mortgages as set by HUD is $625,500. This means that if your home is appraised at any value up to $625,500, that number will be used in the calculation of your benefits under the HECM program.  However, few seniors know that this is only a temporary limit.  The bet is that HUD will revert to the permanent limit of $417,000 after September 30th… the end of the fiscal year.  If your home appraises above that old permanent limit after September 30th, you stand to lose all that added value. The consequences will be devastating to many seniors with homes valued higher than $417,000.

Reverse Mortgage Warning #3

If you are a senior homeowner and own a condominium, HUD has made it unbelievably difficult to get FHA approval for your complex. Without the approval you won’t be able to do a HECM reverse.  We recently worked through the new process with a senior who lived in an upscale community and owned a unit worth over $700,000 in a mature, well manicured complex with an excellent track record. The process was so difficult that we probably will turn down any future deal that involves a complex that is not already FHA approved. The effort is too costly and too burdensome.

Reverse Mortgage Warning #4

Reverse mortgage interest rates will never be lower than they are right now. A fixed rate reverse mortgage, in some cases, can be had for less than 4.50%.  An adjustable rate reverse mortgage is offered at less than 2.00%.  We will not see these interest rates again. At the rate our Federal Reserve has been printing money, look for interest rates to start moving up shortly.

Reverse Mortgage Warning #5

Your home value may have dropped another 5% in the first quarter of this year. It will be quite some time before the trend is reversed and values start to go back up. Experts are talking many years before that might happen.. if at all. As your home value continues to fall, you will qualify for less money through this HUD reverse mortgage program. Seniors who did their reverse mortgage 4 and 5 years ago are pretty happy today to know that they maximized the amount of home equity available to them. They would get much less today. You will probably get much less in the future if you wait any longer.

So – if you’ve been on the fence or if you have just been curious about a reverse mortgage…. hurry to your reverse mortgage loan specialist for some education about the pros & cons. Timing is everything. The longer you wait, the bigger your disappointment might be. (See also Reverse Mortgages – The Risks of Waiting)

Author – Robert H. Irving, CSA®
Senior Reverse Mortgage Consultant – NMLS #19086

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DISCLAIMER: The information presented in this blog is accurate and correct to the very best of our ability. We are not legal experts and we do not attempt to give legal advice. If you think we report something inaccurate, please let us know right away. If we write something you like, let us know about that, as well. Tell a friend or link to the site.

COPYRIGHT 2011: All posts are copyrighted by Robert H. Irving. You may link to any post as long as you properly credit the author and this blog. Thank you.

Reverse Mortgage Video by AARP – Worth Watching!

Below is a reasonably informative video produced by AARP. It’s about 27 minutes in length but worth viewing all of it. Starts off slow but picks up interest a few minutes into it. AARP is to be congratulated on a fair and balanced piece. It’s about time somebody did it right!

Sheilah Kast, the hostess, makes a good effort at explaining reverse mortgages. But she incorrectly states that “… to find out if a reverse mortgage is right for you, you must talk to a reverse mortgage counselor.” This is simply not correct. You are never required to speak to a counselor just to learn about reverse mortgages. And when you do attend a session, the counselor does not/should not make any decisions for you. You should do your own homework and research … including speaking with a very experienced reverse mortgage loan officer. Get your info from a variety of sources and make up your own mind if a reverse mortgage is your best option.

Rep Barney Frank (D-MA) makes excellent points in rebuttal to an assertion that reverse mortgages are destined to become the next sub-prime lending mess. Frank also quickly debunks the unfounded recent public comments of the Comptroller of the Currency.

Peter Bell of NRMLA is a good spokesperson and discusses the code of conduct for the reverse mortgage industry. He also mentions recent changes that lowered fees and prohibited some kinds of past abuses practiced by a few unscrupulous individuals.

Consumers are very adequately represented by Suzanne Montezemolo, Center for Responsible Lending. She advocates for more extensive counseling and acknowledges that it is not the actual loan that could become a problem… it is often the inappropriate use of the money.

The most articulate, I think, is Mary Beth Franklin, Senior Editor at Kiplinger Magazine who is the last guest. She does, however, stumble a little in explaining the new HECH for Purchase product but does a great job overall.

Suze Orman Reverse Mortgage Video – Advice!

Here’s another good video – a very short one, too:

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Author – Robert H. Irving, CSA®
Senior Reverse Mortgage Consultant

Robert Wagner is back on TV in a toned down commercial for reverse mortgages – this time for Guardian First Funding Group out of New York and Philadelphia.  According to a recent employment ad on Craigs List (09/29), this company operates a Call Center and is hiring representatives while  “aggressively expanding operations” in an “upscale Manhattan office (right above Penn Station)”…  see Craig’s List Posting ID 1397934137.

Oh, how the ladies still love Bob!  He is ranked as the number 1 spokesperson for reverse mortgages and his ads generate thousands of phone calls to the Call Centers.  Peter Graves of Mission Impossible fame, the latest to join the procession of celebrity endorsements, has a tough act to follow.  Unfortunately, these free DVD discs and Video tapes provide information of little value.  They do, however, clearly identify TV viewers who are interested in reverse mortgages… and that’s what it’s all about as far as Call Center advertisers are concerned. If you respond, be prepared for phone calls to “follow up” on your information request.

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Author – Robert H. Irving, CSA®
Senior Reverse Mortgage Consultant

Caveat Emptor!

63% of seniors use the internet as a research tool.  You can learn a lot on the internet… if you are very careful.  We don’t mean careful about computer security (although you should always protect your equipment from potential virus infection).  We mean that you should understand that there are hundreds of internet-based commercial operations promising to “put you in touch with our preferred lenders” or have “our reverse mortgage expert call you immediately” or “send you valuable reverse mortgage information“.

Beware!

These people are simply trolling for names and addresses that they turn around and sell to lenders anywhere in the country.  Some lenders will pay as little as $5 per name or as much as $150 depending upon so-called quality.  The more expensive “leads” are usually the result of  responses to TV commercials – like the long running but recently yanked Robert Wagner offer to learn “much, much more…” – by requesting a free DVD or video.  Chances are good that contact information was sold to a lender willing to call you repeatedly (usually at dinnertime) and annoyingly offer reverse mortgage services.

Google Ads

If you “google” the words reverse mortgages you come up with millions of listings.  Listings that appear on the resulting first page are not there by accident.  There is an entire industry dealing with SEO (search engine optimization) that assists those who want to appear among the first few pages of search results.  For a fee, search engines  allow individuals or companies to have their listing appear within the top couple of positions. These paid listings are recognized by the shaded yellow background.  More advertisers  appear on the extreme right column of the page.  You have to wonder why would someone pay money to have you click on their listing?  The answer is usually (but not always) that they will be making money from the information they collect from you.

Other Problems

In the experience of many, the promised information is almost worthless.  The material you might receive will be generic at best, outdated and inaccurate at worst.  The list of “preferred lenders” is laughable.  Even HUD’s lender list is woefully inaccurate, incomplete and way out of date.  These lists are far worse.

Boiler Room Operations

Not only is the information probably worthless, it is likely that you will be dealing with someone sitting in a room full of phone banks calling seniors all over the country from a location in, say – Colorado. You will never see this person face-to-face.  This person will know nothing about lending regulations in your state, say – Massachusetts.  You will have no idea if this person is an expert in the reverse mortgage industry or a youngster that started working the phones yesterday.

Author – Robert H. Irving, CSA
Senior Reverse Mortgage Consultant

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Whatever happened to those annoying Reverse Mortgage TV ads by Robert Wagner?  If you were among hundreds of thousands who called the 800 number and eventually received the promised CD or Video… you might have been disappointed with the contents.  I certainly was.  Possibly, you were more annoyed by the stream of dinner time followup phone calls from strangers located far away trying to “help” you.  You see, your name, address and phone number was probably sold to someone you don’t know and you were targeted for sales calls as a result of your inquiry.

Reverse Mortgage Ads Not Useful

The parent organization of the company behind those ads has experienced some financial difficulties of late.  I’m not seeing Mr. Wagner offering “much, much more” information via his TV ads these days.  Just as well.  They were not particularly useful anyway, in my opinion.  Most forms of Reverse Mortgage advertising are designed to snag your name & phone number and are not too informative.

Face To Face Is Key

And, how could you ever have a face-to-face family meeting to discuss reverse mortgages when the “loan officer” contact is actually a youngster located somewhere in Colorado?  This is not really a decision you want to make on a conference call with a junior telemarketer, is it?  You want your loan officer to have some life experience (maturity) in order to be able to relate to issues that concern seniors.  That’s what made Wagner’s ads so successful… for the lender.  Too bad he was not able to sit down at the kitchen table with you to provide real answers to your questions.

UPDATE: October 19, 2009 He’s back !!!

Author – Robert H. Irving, CSA
Senior Reverse Mortgage Consultant

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