An Unfortunate Reverse Mortgage Saga (Continued)
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We previously published a post concerning an article wriiten by [tag]Kenneth Harney[/tag] of the Washington Post and the angry response it drew from the [tag]National Reverse Mortgage Lenders Association[/tag] (NRMLA). Following is Harney’s counter-response to the NRMLA as published in the San Francisco Chronicle:
Kenneth Harney responds:
The problem with this critique is that it erroneously suggests that my column “seriously misinforms” readers.
The column did not attack [tag]reverse mortgages[/tag], but factually reported one of many situations out there — I call them ticking time bombs — involving equity-share reverse mortgages written in the 1980s and 1990s, where lenders insist on full collection of equity, no matter what the circumstances.
Substantial numbers of these equity-grab loans originated in California. In Katherine Stephens’ case, all she wanted was a little money out of the sale proceeds of her house to pay her nursing home bills. But the lender adamantly refused — unsatisfied with an 11.5 percent interest rate compounded over 18 years. (Remember, Stephens only received $67,586 from the lender; the lender now insists on collecting half a million dollars from her.)
In the column I did mention that the industry abandoned active promotion of these loans. I didn’t mention why: Class-action lawsuits and settlements in California and elsewhere; criticism from AARP; and yes, negative publicity.
The industry is embarrassed by its own behavior and wants to hide information about aggrieved customers like Stephens.
Bell, chief lobbyist for the reverse mortgage industry, wants only sugar-coated news coverage. But the reality is that Bell and the industry cannot challenge the facts — and they have not.
Here’s an interesting discussion thread on this issue.
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