Archive for April, 2013

Unbalanced and Inaccurate

Friday, April 5th, 2013

 

Carole Fleck’s piece ¬†on reverse mortgages in April 2013 AARP Bulletin is interesting if misleading in two important areas. For example, the suggestion that lender/broker “non-disclosure” of tax and insurance default risks is the cause of HUD’s tax and insurance default problems is a stretch;the causes are more complex. HUD and the actuarial experts who check its insurance books know that.

Borrowers get mandatory pre-lending counseling from federal-government-approved counselors who are required to disclose all risks. In additional, loan originators (lenders/correspondents/brokers) must make the same disclosures and borrowers must sign papers saying that they have received these warnings. Borrowers get to take these disclosures home for extra review for weeks, even months before loan closing.

Also, the sidebar “What You Should Know” should have mentioned that a low-cost/low-payout reverse-mortgage option (the HECM Saver) has been on the market since 2010. It is unfair and misleading to use the Standard HECM reverse-mortgage insurance premium (without mentioning the real benefits of the premium) to illustrate reverse-mortgage costs in 2013 when a low-cost option is available.

Because articles in AARP publications carry weight with seniors and others, balance and accuracy are important.

 

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