Never underestimate the power of the media when it comes to taking something completely legitimate and distorting its image as if it is some shady racket.
The January 10 "NBC Nightly News" gave that impression about reverse mortgages - a special type of home loan that allows a homeowner to convert some of the equity in his or her home into cash. These loans are geared toward senior citizens, one of the key demographics of the evening network news shows.
"Nightly News," however, based its report completely on a 78-year-old story who felt she was deceived.
"Reverse mortgages allow seniors 62 and older to borrow against the equity they've built up in their home," NBC correspondent Tom Costello said. "But upfront costs can be steep, $12,000 for Ms. Munoz. Then, her attorney claims, the sales agent who suggested the reverse mortgage sold the 78-year-old woman long-term investment annuities that don't mature until 2033. When she tried to withdraw some of that money, she faced a 20-percent penalty."
Munoz' daughter said her mother wasn't fully aware of the terms because "she's primarily Spanish speaking, she's hard of hearing, and she trusts people."
Munoz has lived in the same home in Los Angeles for 53 years, where the majority of the citizens speak English at least "very well." Munoz had joined a class-action lawsuit against the sales agent, broker and lender.
Costello ignored the possibility Munoz neglected her obligation to be responsible borrowing against her home - an asset in which she had built up $300,000 in equity. The report also did not provide comment from Munoz's lender for another side of the story, only mentioning they contended she was counseled.
"The lenders insist Ms. Munoz received federally required financial counseling," Costello said.
Editor at Large
Comments Policy
If it sounds to good to be true
January 11, 2008 - 17:15 ET by Lame CherryMs. Munoz didn't your mommy ever tell you if it sounds too good to be true.......well someone is making a fortune off of the good news and it ain't gonna be you.
It is not different than cashing in life insurance policies, someone is making money off of your misfortune.
*HIC IACET ARTORIVS REX QVONDAM REXQVE FVTVRVS
You seem to be implying Mr
January 11, 2008 - 17:24 ET by KeithYou seem to be implying Mr Poor, interesting name considering the subject matter, that Reverse Mortgages is a "good thing" and the bad ol' MSM is just lying. Nothing could be further from the truth. This is a PREDATORY lending practice that seeks to take property from old people by giving them some cotton candy now. When they die before the money is paid back, their estate will most likely have to be SOLD to satisfy the debt. Thereby depriving their heirs of an asset in the hundreds of thousands of dollars range. It's a trick, don't be fooled. Cherry's right, if it seems to good to believe it usually is.
Predatory?? There are no
January 11, 2008 - 17:38 ET by bassndudePredatory?? There are no such things as Predatory lending practices. There are good deals and bad deals. It is up to the borrower to see that they are getting what they want. Nobody had a gun to their head when they signed the dotted line. The heirs are really entitled to nothing. If parents wish to leave their kids or relatives something, it is up to them. If that is not their plans, then they are within their rights to spend what they have before they die. I for one would never tell my Mom not to do this, if it was going to provide for her enjoyment. Its not my house, and not my money that bought it. Only a cheap, greedy uncaring person would deny their folks for their own ends.
Save a SeAL, club a liberal!!
Amen!
January 11, 2008 - 18:02 ET by heldmywAlthough I wonder why a third-party need be involved. If a senior were to move the equity in their home into a tax-deferred annuity, continuing to make the mortgage payments (hopefully at a reasonable interest rate,), and use that annuity to supplement their retirement...
Why pay fees to a third party at all?
I agree that there is
January 11, 2008 - 20:55 ET by River DogI agree that there is nothing wrong with the concept of a reverse mortgage if the terms and obligations are properly disclosed. But to claim there is no such thing as Predatory-lending practices is absurd. Drive through the rich part of your town. Count the number of pawnshops, Rent to Own Furniture, Tote The Note car lots and Pay Day loan places to you see. Not many right? Now drive past your local military base and count those same businesses out side the gates. Scary isn’t it?
These slime ball "Loan Specialists" pray on the ignorant and the poor. In most cases they do not clearly explain the down side to the stupid deal they are pushing. They often find our brave enlisted men and women, many of whom are out on their own for the first time and unwise about how these sharks operate.
I'm as conservative as the next guy (got my Fred 08 sticker on my truck) but I won't defend a slime ball. Lying to someone to get them to sign a bad deal they don't understand is not honorable and reverse mortgages are always bad deal for the home owner.
As someone in the business.....
January 11, 2008 - 19:15 ET by Prester John.....it is my view that setting up a reverse mortgage in itself is not "predatory" since it is a way to access the equity in the house. What IS predatory is the "advisor" who recommended that she take the money and then put into an annuity so that he could get a really juicy commission.
At a minimum he should be fined and maybe even have his securities and insurance licenses pulled. And if the company had any sense of honor they'd cancel the annuity transaction completely and as we say, "make the client whole".
Shame on the advisor and shame on his company for letting this happen.
MORON!
January 11, 2008 - 22:41 ET by CrashOne would think she was old enough to know better.
This is why our schools should teach finance, capitalism, Milton Friedman style economics; instead of sociology and crap like global warming.
Moron?
January 12, 2008 - 02:01 ET by vaboxrboyI sincerely hope that wasn't directly aimed at me, gentle one. I am a a school teacher, an English to be exact, and because of "No Child Left Behind" we teach tests on mutiple choice items and there is no more teaching of how to write a check or balance your checkbook.
I tried to teach my seniors about renting apartments and the dangers of cellphones and credits, but with nearly a month of time mapped out for testing that gets laid by the wayside. I sneak one day in to give them the heads up on an adult- no college budget to at least motivate them to stay in school.
And common sense would tell you that some 60 year old woman of little formal education is an easy target.
Please remember that all the bad stuff going on does all of us no good!
God Bless you for your conviction.
Nard knocks
January 12, 2008 - 19:59 ET by CrashCertainly not meant toward you.
I was commenting on the fact that people should know better how to manage their finances. Especially those who have had a half century to learn. I know this seems like a cold approach, but, what do we have in life if we don't learn something new? And I'm not talking about learning from Oprah, the nightly news, or from Hollywood rags (take that as you list).
Cheers!
No child left behind
January 12, 2008 - 21:03 ET by amberAre you a member of a teacher's union?
Not to get off track, but you brought it up. If the teachers, schools, and the teacher's unions cared about actually educating our children, then the Bush administration would never had had to create NO Child Left Behind. If your teacher's union would take some time to find out how to best help the children maybe you would not have to test children to so many different standards. Don't blame No child Left Behind for your shortcommings. I, as a parent and a person who truely loves math, was sick and tired of seeing incompetent morons teach my children how to do "cool" math on a computer because all the teacher knew were the rules to dodge ball. I may not have a teaching degree, but since pulling my kids out of your schools, I raised their MAP scores 20%. I don't have a problem with all of the required testing. Why? Because I don't spend whole days celebrating Valentines Day and having pep fests and speakers every month. Get rid of some of your superflous activities and maybe the children will have time for the tests. Oh, and don't come begging me for more cash to fund your schools until your schools are ready to take a long hard look at their excesses. Get rid of sports, they belong in the park and rec, reduce the superintendent's salaries, hire someone to evaluate where you are wasting (corporations do that and they save quite a bit). I have no problem with paying teachers more, but their salary and their ability to keep their job better be based on performance and need for that type of teacher. There is no reason a phy-ed teacher should make the same as the physics teacher. There are thousands of phy-ed teachers, but you will rarely attract a great physics teacher unless you pay them what they are worth out in the civilian world.
I'll stop now.
Are you stopping your rant
January 16, 2008 - 19:20 ET by vaboxrboyAre you stopping your rant or drinking the kool-aid?
There's so much wrong with that post, but I will tell you just one simple point. Teachers' unions are only present in the larger states such as NY, CA, and maybe a few other Northern states. As for the rest of us, we spend our little salaries to provide our own copy paper and supplies for kids who have none. For many, many kids, school is the only structured thing and their only chance for a better life. Yeah, let's blame the boogey man union and let the kids fall through the crack. Sounds good to me.
Class action suites don't just happen
January 11, 2008 - 23:26 ET by vaboxrboyWhere is the outrage that this company appears to have been taking advantage of elderly people? We know for a fact that the elderly are often the victims of phone scams, credit scams and all out theft.
I truly do not believe that NBC is trying to whip up hysteria on this issue. It is a problem and we should hope that most of us want a happy outcome for this senior citizen as well as the thousands of others who have been duped out of their life's work.
vabox
January 12, 2008 - 02:29 ET by Cool ArrowIf you'll take a look at the bottom of the screen on those commercials featuring Robert Wagner and James Garner, (both are '60's heartthrobs, wonder why they were chosen) there are states that do not allow reverse mortgages.
Let's not kid ourselves, the demographic is the widow woman whose kids are trying to leach some bucks off the old bat.
I ♣ My Seal
The popularity of this type
January 12, 2008 - 07:28 ET by jdhawkThe popularity of this type of lending seems to be growing. That is unfortunate. If an elderly person has equity in their home or hopefully owns the home outright, it makes a lot more sense to sell it and move to an apartment or condo with further moves to assisted living and full time care. This frees up cash so that person may enjoy their last years on earth.
I just don't see the upside of borrowing against real property using a reverse mortrgage. It is stupid.
Meanwhile, the has been actors that are pushing this crap seem to have no bounds when it comes to their avarice.
Why stop with the actors?
January 12, 2008 - 08:36 ET by BuffNBoneWhy stop with the actors? Don't the station outlets that run the commercials bear some of the culpability? Wouldn't it be nice if they could be incorporated in the class action suit?
"Fighters are fun but bombers make policy"