It’s been over four months since I started researching reverse mortgages in an in-depth way and I finally can say with confidence that I now understand them… past, present… and I think, even their future.
I also have finally come to understand why reverse mortgages are so misunderstood by so many people who really should understand them.
It all started a few months ago when I was talking to the CEO of Impac Mortgage, Joe Tomkinson, and he asked me if I knew anything about reverse mortgages. I replied just like most people do when I ask them the same question. I said something to the effect of:
“Not really… I’ve heard there have been some problems… or that they’re expensive… although I’m not really sure what I’m talking about… or even why I think that way.”
Had I been talking to any other mortgage banking executive at the time, it’s likely that the whole thing would have ended right there, but this was Impac’s CEO… and as I’ve written about before, during this last financial crisis that began in 2008, Impac is the only mortgage bank that did right by borrowers, shareholders and bondholders by modifying loans back in 2008… without requiring that borrowers to be delinquent. They refused to take any taxpayer bailouts… they took their losses and came through a financial crisis that few others survived. No one else did anything like that, as you probably recall.
I have an enormous amount of respect for Joe and the company’s president, Bill Ashmore, among others at the company, so because he thought highly of reverse mortgages, then I wanted to know more. And the very first thing I wanted to find out was why everyone… me included… seemed to have a negative impression of reverse mortgages.
The first fact to know is that reverse mortgages are part of a federal program… they’re regulated by the U.S. Department of Housing & Urban Development (“HUD”) and they’re insured by the FHA. That alone told me that reverse mortgages couldn’t be any sort of scam… so I couldn’t figure out why I had heard so many negatives about them.
I went online and started reading every negative story about reverse mortgages I could find, and very quickly I realized that the nightmare stories about reverse mortgages were not actually caused by the reverse mortgages themselves. …read more