The Herald-Tribune published excerpts of a panel that took place at the National Association Real Estate Editors (NAREE) convention in Washington, D.C., where there was a panel debating reverse mortgages.
One of the topics debated was the costs of reverse mortgages which are often criticized due to the fees that are involved.
"I don’t understand where this continual criticism that reverse mortgages are so expensive comes from," said Peter Bell, president of the National Reverse Mortgage Lenders Association. He added, "Almost every article I read about reverse mortgages … says that reverse mortgages can be very helpful, but a lot of people say they are too expensive. I am just puzzled by that comment being repeated without tearing it back and looking at the numbers."
During his speech, Bell compared the costs (origination fees, interest, ect.) of a HECM with a senior selling their home as well as a “forward” FHA mortgage which showed that the costs were about the same over the life of the loan. However, not everyone in attendance liked the comparison.
Susanna Montezemolo of the Center for Responsible Lending felt that Bell’s comparison was misleading because "that’s not really the option that these borrowers have," she said.
"They are not choosing between an FHA forward mortgage and an FHA reverse mortgage. The comparison should be between the reverse mortgage and their other options, because we are talking about seniors who cannot get a forward mortgage because they do not have the income to pay it back each month."
The Tribune published more of the interaction between Bell and Montezemolo. You can listen to Part 1 and Part 2.
