Until I started in the reverse mortgage business five years ago, I was blissfully ignorant of how inaccurate and negatively biased the media often is in its reporting.
My concern is that the negative tone and inaccurate claims made by nearly every article about reverse mortgages may dissuade older adults from exploring the option when it may help them improve their quality of life.
Newspapers and the media used to be in the business of providing information to people. Today, they are in the business of selling advertising space. They wield the power to influence people but, rather than using this power responsibly, they twist and contort their stories to magnify readership and increase the value of advertising space.
We all know that fear and bad news sells. With most major newspapers struggling financially, they are scooping mounds of both into every issue with titles like “Beware of Reverse Mortgages” and “Reverse Mortgage Scams!” They use charged language like “vultures”, “money changers”, and “circling their prey.” One even called reverse mortgages a “’screw your kids’ mortgage” – not exactly fair and balanced reporting!
Nearly every article is the same: the reverse mortgage industry is growing and attracting new, more aggressive participants – some of whom may be unethical. The article usually tells how some fraudster took advantage of a senior. The article concludes by saying reverse mortgages are good in some situations but those considering one should investigate it thoroughly.
What bothers me most are the examples the media highlight in these pieces. In nearly all cases, the problem faced by the senior was not caused by the reverse mortgage but by unethical individuals. Nevertheless, the media tries to pull the reverse mortgage into the situation and make it look like the loan itself is the villain.
For example, Parade Magazine recently referenced a “scheme” whereby a senior is told they can save their home from foreclosure by getting a reverse mortgage. They apply for a reverse mortgage but are denied. Then, they are convinced to sign over title to their house to an investor in order to save their home. As a result, the senior loses their home anyway and the “investor” now owns the house.
While unfortunate that this person lost their home, how is this the fault of the reverse mortgage? If the reverse mortgage was denied, it must not have been an option in the first place. What if instead of a reverse mortgage this senior had applied for a job and was denied? Would we say that the employer was part of a scheme to bilk the senior of his home? The reverse mortgage has nothing to do with the actions taken by an unscrupulous investor outside of the loan.
In another example, I came across an article entitled “New Fraud with Reverse Mortgage” about a senior who applied for a reverse mortgage to payoff an existing mortgage balance. When the reverse mortgage lender funded the loan to the title company (who is supposed to forward the money to the current mortgage holder to pay them off), the title company kept the money instead. The title company did this on numerous loans both reverse and forward.
This isn’t reverse mortgage fraud - it’s title company fraud! The owners of the title company broke the law and will go to jail. It didn’t matter to them whether it was a reverse mortgage, forward mortgage, commercial mortgage, or residential mortgage. Whenever a lender sent them money, they kept it.
So why was that article titled the way it was? Because fear sells! Reverse mortgages are already misunderstood and people are skeptical of them so the media feeds into that fear to increase its readership. Most people don’t know what a title company does so an article about title company fraud just isn’t as sexy.
As you read newspaper articles or watch television segments about reverse mortgages, do so with a critical eye and recognize that the media these days is more focused on selling ads than providing fair and balanced information.
Mark Schmidt has been a reverse mortgage specialist since 2004. In that time, he has guided hundreds of seniors through the reverse mortgage process. He is a veteran in the industry at a time when many others are “jumping on the bandwagon” of reverse mortgages.
A graduate of the University of Illinois, Mark also has an MBA from Loyola University and twelve years as a financial analyst with Merrill Lynch and Bank of America. To understand the needs of his clientele better, he was designated a Certified Senior Advisor in 2007 by completing additional studies of the social, physical, and financial aspects of aging.
Mark is the reverse mortgage expert for www.caregiverlist.com and is the author of “Reverse Mortgages: Facts and FAQs” which was in Amazon.com’s top five list for reverse mortgage books before selling out.
For more information, call Mark Schmidt at 773-504-9633 or email Mark Schmidt directly.