On the Docket—Rough Times
In March, The New York Times published a column by Jessica Silver-Greenberg focused on heirs of reverse mortgage borrowers. The article was later picked up by the Boston Globe, the Worcester Telegram and Yahoo, and was referred to in personal finance columns in other publications. In response, NRMLA sent the following letter to the editors and, in some cases, ombudsmen, of all publications that ran or referenced the article:

To the Editor:
A recent article [“Pitfalls of Reverse Mortgages May Pass to Borrower’s Heirs,” March 26, 2014] published on The New York Times’ DealBook blog was riddled with false assumptions and devoid of facts to support them. The reverse mortgage industry has worked for years to improve the product and tighten federal rules surrounding them. We have made great progress, and today’s reverse mortgages are an important retirement financing tool for many aging Americans. That’s why we are particularly discouraged to see this incorrect reporting, which perpetuates myths and misunderstandings.

First of all, the story is based on an entirely false premise. A reverse mortgage, like any other loan, is a loan to the borrower, not the borrower’s heirs. If a parent passes away and leaves behind a home with a traditional “forward” mortgage, the heirs are no less responsible for the terms of that loan than they would be for the terms of a reverse mortgage. The difference is that, with a reverse mortgage, the funds advanced by the lender are used to sustain the borrower in his or her final years. There is no right or entitlement to inheritance, as the article suggests. With increasing longevity, it will take more and more of a household’s wealth to cover living and health care expenses, diminishing inheritances. (As a boomer, I recognize that my parents’ longevity might diminish any inheritance coming my way, but I am instead blessed with having my parents this late into my own life.)

Secondly, the article is filled with misleading rhetoric. It claims heirs are getting a “harsh sting” in discovering that their parents utilized a reverse mortgage. In fact, they have often been spared from having to fund their parents while they were alive. And if they want to keep the home, heirs have the option of simply paying back the loan. If the home’s value has declined, they have the option of paying back 95 percent of the appraised value at the time of the borrower’s death.

Third, the article fails to mention that the federally mandated counseling required to qualify for a reverse mortgage—which the parents featured in the article received—includes review of the growing balance and declining equity aspect of the mortgage, as well as the impact on the borrower’s estate. With all of that knowledge, the parents featured in your article decided to proceed with a reverse mortgage.

The article claims that one lender only offered an heir the option to buy the home for 95 percent of its current value once contacted by the Times. In truth, there is no reason for a lender to violate HUD’s guidelines to accept a payoff at 95 percent of the value, because it’s the most cost-effective and immediate route to resolution for the lender. The Federal Housing Administration (FHA) will cover a shortfall from the full balance due under the lender’s contract of insurance.

Finally, when the borrower on a reverse mortgage passes away, under a Home Equity Conversion Mortgage or HECM, the lender gives the estate notice that the loan is due and payable, time to make a decision for what they want to do, and, if a decision is made to sell the home, an initial period of six months, plus possible extensions, to do so. If the representatives of the estate fail to respond, then the loan servicer must take action to gain control of the property.

The handling of an estate is inherently difficult—both emotionally and logistically. But the Times’ decision to narrowly focus on three grieving families to make a misguided and one-sided case against reverse mortgages undermines the tens of thousands of individuals who have chosen, through a reverse mortgage, to live out their lives in their own homes, with the comfort of meeting their financial obligations, while not burdening their families.

Peter Bell
President and CEO, National Reverse Mortgage Lenders Association
Washington, D.C.

On the Set with the Extreme Summit
On a sunny Friday in March at the foot of rolling hills 30 miles northeast of Los Angeles, 22 people near or over retirement age celebrated a life well led—thus far. The occasion was the shooting of a television commercial for an educational campaign about new reverse mortgages known within the industry as the Extreme Summit.

As director Mark Taylor clapped his hands repeatedly to keep his crew of more than 20 moving at a quick clip around a gray cyclorama, actor Paul Ganus made his way—and in under a minute—through college, the ‘60s, marriage, the purchase of a house, children and arrived at the threshold of retirement. Having made the choices throughout his journey to live the life he wanted, he now found himself faced with a choice that could secure the rest of his life.

The spot is a joyful jaunt through the good things in life, and the atmosphere in Stage 3 at Delfino Studios in Sylmar reflected both the tone of the commercial as well as the upbeat

demeanor of Taylor and executive producer Sylvia Versace of Radarworks ad agency in Los Angeles. Together, they led two months of careful, well-thought-through pre-production that enabled shooting a boomer’s life journey in just a day’s time. (I’m intentionally not revealing the overall theme of the spot as well as the tagline, so that you eagerly look forward to seeing it for the first time.)

The spot will be the centerpiece of a three-city pilot for the educational campaign scheduled to launch in Philadelphia, Denver and Seattle in the late spring. It will be aired on television in those markets as well as featured on a website, newreversemortgage.org, specially constructed for the effort. Spreading the message will also include print ads and a comprehensive boots-on-the-ground public relations effort in each market administrated by NRMLA and aimed at engaging local press and influencers and, as a result, consumers.

We will be rallying NRMLA members in those cities and surrounding areas to help us expand this industry-sponsored effort. Be on the lookout for invitations to join us at upcoming preparation sessions.

In NY—New HECM, HMBS Poised for Growth
Almost 300 NRMLA members, non-members and interested investors gathered at the Intercontinental Times Square Hotel in New York in March for an energetic and forward-looking Eastern Regional Meeting & Finance and Investor Forum titled, “New HECM, New York.” The focus throughout the two-day event—the largest-attended NRMLA regional meeting in recent years—was utilizing recent changes to the HECM program to expand the base of potential borrowers and present them with a better product and more secure future.

Many of the sessions—including a look at industry trending that featured HUD’s Karin Hill, AAG’s Reza Jahangiri representing industry executives, Anthony Lopes of Cambridge Credit Counseling representing counselors, and NRMLA President and CEO Peter Bell—highlighted broadening the spectrum of interested consumers as regulations and research sway reverse mortgages toward those assembling a comprehensive retirement plan.

The Finance and Investor Forum, an afternoon devoted to developments in the HMBS program, featured a review of the state of the program by John Getchis, senior VP in the Office of Capital Markets at Ginnie Mae; a look at myths and misperceptions of reverse mortgages to better educate attendees from outside the industry; and panels on expectations for the improved HECM following recent changes by representatives of a dozen companies from the investment community. Overall, the forum presented an HMBS program geared up for considerable growth and diversity.

On the Beach—Save the Date
The beautiful Loew’s Hotel in Miami Beach’s sizzling South Beach will be the site of this year’s NRMLA Annual Meeting & Expo. Mark your calendars and join us November 10-12 for the largest, most exciting (and hottest) gathering of reverse mortgage professionals each and every year. (Surfboards permitted.)