I was also going to post this from the second link:
So the scam isn’t from the reverse mortgage itself, but rather the unscrupulous use of reverse mortgages to bilk money from seniors.
Also Early Ford Broncos, BMW e10s and Toyota FJ40 Landcruisers. Jesus, everybody seems to drive these on TV, but in reality, they are pretty damn rare and pricey.
I see Irishman posted some good links (I didn’t read them yet), but I know someone who had a Reverse Mortgage, and when the loan was ‘finished’, she was booted out of the house and Bob’s Your Uncle! I don’t know the small print of the deal, but yeah, death isn’t necessarily the end of the deal.
No idea where this old lady ended up landing.
There are all kinds a ways a reverse-mortgage recipient can commit default of the agreement, and thereby trigger foreclosure. (And loss of their homes.)
These companies are NOT in the business of waiting for Grandma to pass away.
They are in the business of foreclosing as quickly as possible, selling the home at a profit, and moving on to the next one.
Pathways to “committing default” and thus triggering foreclosure are mentioned in this USA Today article; no doubt there are other compilations online, too:
Tom Selleck is an execrable human being, shilling for these companies. Again, their business model is based on turnover…not on waiting patiently.
It’s certainly possible that some reverse mortgage customers manage to dot every i and cross every t and so avoid defaulting (and thus being booted from their homes)…but they are not the norm.
They have cleaned those up. They can be Ok for people who have no one to leave their house to, but still want to live int it until they die.
Well… there are a few ways to default. Not paying the taxes, for example.
Thank you for that article. It does highlight how lenders can abuse reverse mortgages, and they are incentivized to seek out reasons for default.
As the other articles mentioned, you have to keep the home in good repair, and you have to keep all utilities and property taxes paid. And you have to use it as your primary residence.
There can also be problems if someone not listed on the mortgage is living there and the mortgage holder dies, such as a spouse.
Also mentioned is the widespread industry practice of selling mortgages. You take out a loan from one institution, then they immediately sell it to someone else. Now you are dealing with a completely different financial institution than the one you signed up with, and you have no say in the matter. That happens on regular mortgages, too, and can be confusing there as well.
And it can happen more than once, making the risk of miscommunication or losing information or even losing contact with who you are supposed to be paying go up exponentially. That practice is much more of a risk to homeowners than reverse mortgages in themselves.
Reverse mortgages are supposed to be safe and have protections for the homeowners so they can’t owe more than the worth of the home or be forced out of the loan reaches that value. But there are routes to default, and lenders will seek those out, because there is no value to them in holding a mortgage that is not going to be paid back any time soon and interest can’t accrue. That is a loss to them.
Reminds me of the ads for MJ Hagar, Jon Cornyn’s opponent in Texas. She’s not just a mom, she rides a flat black Harley!
You joke but last year I spent a week in the hospital after emergency surgery getting antibiotics pumped into me because one of my diabetes medications manifested one of its rare side effects and gave me necrotizing fasciitis of the groin. For reals.
I just saw a Trump ad which flat-out said “Democrats aren’t what they used to be.” Even his ads project like a multiplex!
I just saw the most bizarre ad on YouTube. It was for some Mexican beer (Tecate or Corona) but at the start of the commercial in tiny unspoken text at the bottom was the line “Viewers under the age of 21 should not watch this video” which quickly disappeared and was replaced with the typical “Alcohol is for those 22 and over, alcohol should not be used in conjunction with driving etc.” text. The weird thing was that this ad was in front of a video that was marked for all ages so I have no idea what that disclaimer that minors shouldn’t watch that beer ad was meant to enforce.
All your points were excellent, but this is particularly worth emphasizing.
And returning to the thread topic: no matter what the fine print at the bottom of the screen on commercials for reverse-mortgage companies, the commercials themselves are wildly misleading. The Selleck ones outright attempt to assure viewers that there is virtually no chance that something could go wrong. The spots are, of course, artfully written to avoid outright lies. It’s all innuendo and double-talk and ol’ Tom being folksy and ridiculing the idea that “the banks” might be trying to “get your house.”
Yikes. I’m sorry that happened to you. That’s actually a bit wild, though, to hear someone that actually happened to, because the commercials with their warnings are so amusing. But reality bites.
Don’t get me started on John Cornyn. That’s better suited to a thread in a different forum.
So he talks about the guy who created reverse mortgages, and the intent behind them. Ideally, that’s all they are - loans using the house as collateral. But the real world has banks who don’t make money on letting a homeowner live out their life in their house with an outstanding loan. Especially since the interest gets capped at the value of the home. They want their money now, and they want as much as they can get on the investment. So their incentives are directly against the stated intent - you keep the title to your house. Except if you default, and the default possibilities are pushed to the limits.
^Exactly. The ads carefully obscure the actual business model of these companies, hoping that suckers, er, customers, will never catch on to the reality of what they’re dealing with.
The Tom Selleck commercials are probably going to be taught in marketing courses for years, as exemplars of ‘artfully misleading customers while staying just this side of being liable for actionable lies.’ A proud heritage!
The definition of American “free market” capitalism.
True enough, sadly. But sometimes the marks catch on—and consign the ‘just this side’ con-artists to oblivion, or at least to unprofitability.
Just saw a Tide commercial in which Tide wants to make conscientious housewives worried about invisible dirt. INVISIBLE DIRT! You may not see it but all your things are still dirty and will remain dirty until you buy our shit.
I hate commercials that make men look like idiots and there’s a Buick ad now that fits this perfectly. The guys insist the car is an Alexa. Yeah, because adult men have no idea what Alexa is.
My 90-y/o technophobic father-in-law knows what Alexa is. But apparently the guys in this commercial are dumber than dirt about the car they bought. Does Buick think this is how you sell cars?? Seriously?
As if 2020 hadn’t given us enough to deal with, Sonic has brought back the unintelligible child…in addition to the original commercial, there’s a second one in which he sounds like he’s trying to rap about the burger.
Whoa! I hope you’re doing better. I wonder just how rare that particular side effect is?
I got better, thanks for asking.
Tide- with their pods that deliberately look like candy - is reprehensible.