Commentary: Stop blaming the ‘HECM sandwich’

Several years ago, a journalist told me about a disgruntled reverse mortgage client. He then suggested that maybe the reverse mortgage should be changed or even eliminated altogether. As a reverse mortgage advocate and apologist, I could’ve responded defensively but didn’t. I merely asked a simple question in a calming tone:

“If I walk into a restaurant and the wait staff sells me on their great double cheeseburger, but I’m served a chicken sandwich, where do I place the blame?”

The journalist laughed, but I continued with my analogy and answered my own question with a few more of my own:

  • Could I have misunderstood the product I was ordering?
  • Did the wait staff misunderstand my order?
  • Was my meal served incorrectly?

These are all legitimate explanations for a dissatisfied restaurant patron, but wouldn’t you agree it would be unreasonable to blame the chicken sandwich for the issue?

When it comes to reverse mortgages, many journalists, critics and legislators want to blame the “chicken sandwich,” in this case the Home Equity Conversion Mortgage (HECM), when that chicken sandwich clearly did nothing wrong.

Reverse mortgage educator and author Dan Hultquist.
Dan Hultquist

Studies show the greatness of the sandwich. Nearly 90% of patrons surveyed show they were “satisfied” or “highly satisfied” with their meal. If Wade Pfau were a restaurant analyst, he’d have already written multiple books and papers proving the merits of ordering chicken sandwiches.

You see, nearly every negative reverse mortgage experience can be traced to a poor understanding of the product or sloppy service. Please do not blame the federally-insured HECM when the problem likely came from any number of sources.

For instance, the consumer could have misunderstood the product they were ordering. The loan originator could have misunderstood the consumer’s needs. Or, the servicer could have administered the product incorrectly

I was recently called by a state attorney general’s office looking to understand a few complaints submitted to their office recently about reverse mortgages. I was told that a woman requested $23,000 from her HECM line of credit, but didn’t receive her funds within the five business days required under HECM guidelines.

The loan originator informed her that she would be receiving a 10% penalty reimbursement for her troubles. I jumped into the conversation and said, “Wait, let me guess: she was upset when her compensation was capped at HUD’s $500 threshold.”

One by one, I was able to explain the errors that produced the complaints. Not one issue was the fault of the HECM product.

If you want to improve the public perception of your restaurant, there are two easy solutions: one is to train your staff properly and monitor your Yelp rating. Likewise, if you want to improve the public perception of the reverse mortgage, it may be prudent to train your staff properly and monitor Consumer Financial Protection Bureau (CFPB) complaints.

If you are a legislator or regulator, there are indeed ways to make the reverse mortgage better — we all want a better chicken sandwich, after all. But, before you go down the legislative or regulatory path, let’s first identify the problem and place the blame squarely where it belongs.

This column does not necessarily reflect the opinion of Reverse Mortgage Daily and its owners.

To contact the author of this story: Dan Hultquist at

To contact the editor responsible for this story: Chris Clow at [email protected]

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