Posted on 08/25/2010 12:55:22 PM PDT by luckybogey
This sleazy ad has been on cable news all day. Former presidential candidate and country bear Fred Thompson wants old people to get "Absolutely FREE," government-backed reverse mortgages. What do we know about this shady company Thompson is endorsing?
...Oh right, and they're government-backed! That's how investors get paid. (Fred Thompson, a true Fiscal Conservative, makes a big point of this "full government backup" in his terrible ad.)
Reverse mortgages are available to homeowners who are 62 years old or older and own their homes outright or have a substantial amount of home equity, according to the HUD site. The vast majority of reverse mortgages are insured by the Federal Housing Administration, through the Home Equity Conversion Mortgage (HECM) program.
The reduced fees on reverse mortgages are a result of another important industry development: investor demand for securities backed by those mortgages, Bell said. These securities are backed by Ginnie Mae, based on a reverse mortgage insured by the FHA, he said, and with that combination, "you have a very secure investment."
But would ex-Senator Fred Thompson, America's most trustworthy conservative political figure, endorse financial products from a company of sleazy repute?
It just so happens that this company, American Advisors Group, was sued by Illinois Attorney General Lisa Madigan in February:
Attorney General Lisa Madigan filed lawsuits against two mortgage brokers for using unfair and deceptive marketing practices to solicit seniors for reverse mortgages.
"These companies used extremely misleading language in their advertising, sometimes even disguising their loans as government benefits that borrowers don't have to repay," said Madigan. Many consumers have reported that they didn't even know these offers were for reverse mortgages or a loan of any kind added Madigan.
(Excerpt) Read more at gawker.com ...
They guy is probably just glad to have a job in Obama’s America.
Sad. If he had been paying attention - he could have been President. I think Dick Wolf screwed him over.
I considered a reverse mortgage in 2007 when my house was worth 50% more than it is today. Bad move passing on it back then!
The words “Illinois Attorney General” ought to have tipped you off to the political tendentiousness of the article’s premise.
Just why did he have to make those stupid commercials? Can’t any famous conservatives stay above the fray?
Someone better tell the author of this bilge that the lefty liberal Henry (AKA ‘Fonzie’) Winkler has commercials touting the same thing.....reverse mortgages.
Just why did he have to make those stupid commercials? Can’t any famous conservatives stay above the fray?
I’m having some trouble understanding this. The article says they’re brokers. Is Fred advertising for the brokers of loans, or for lenders? Last time I checked, brokers brokered, they didn’t lend.
And then “114,692 reverse mortgages were made in fiscal year 2009, compared to 157 in 1990, when people had actual money.”
Wasn’t 1990 when reverse mortgages were a new thing? Maybe 19 years later there are a lot more of them because they are something consumers actually want.
I agree with your point and he has the right to make money for his family. However, I feel the commercial is “unbecoming” of a respected statesman for fiscal conservatism and I have lost respect for the man.
“What do we know about this shady company . . .”
Gawker didn’t do the research, and jumped to a conclusion all in one sentence.
People wonder why nobody buys newspapers. Now these tools run internet based rags. You can’t even GIVE propaganda away.
As for Thompson, I admit having the same strange feeling. There is a MASSIVE demand for RM’s to back securities based on them. These securities are selling like hotcakes.
For me, this market for RM’s is looking bubblish. The point on which these RM’s pivot is the appraisal of the underlying asset - the home.
A veteran in their home for 40 years, that bought for $25,000 (2,500 sf) is probably being offered a LOT less than what they would have 6 years ago to be sure. They are probably being offered less than what the market will bear as well.
Bank sits on fully paid off assets until the market recovers. The veteran makes $175,000 on a $200K RM, but in reality the bank probably makes another $50K to $100K in future equity on the asset. The geezer, they figure, would never realize that in this market. Since the bank will outlive the geezer, the bank vultures the extra 100 kilobucks.
Who loses? The estate, probably. Maybe the kids that have been footing the bills.
Truly, RM’s are EXACTLY like taking candy from babies at this point. Every time the housing market falls, the assets the geezers are sitting on go up in value to the bank.
More than that, the banks making the RM’s are picking up the assets from failed banks MINUS the bad loans, which are being picked up by the taxpayer (the inheritors of geezers estate). The big banks are being turned into absolute monsters right now in all of this. It is ALL UPSIDE for them. Community banks are getting killed.
It’s not a loan. The bank buys back the equity you own in your house and you are free to do with that money whatever you want. For some seniors, especially those who have no need to pass on their property to an heir, it can give them cash for living expenses they otherwise would have to take from accumulated savings.
There is no problem with the Reverse Mortgage on its own....the problem is that Thompson, who was supposed to be a “conservative”, is pushing “Governemnt Backed” R-M’s....Government Backed real estate deals are a big reason why our economy tanked. Thompson is doing nothing more than endorsing Business Socialism
However, Reverse Mortgages cannot be done on homes “underwater”....and many elderly in southern states are very underwater on the homes. Most Florida elderly folks cannot do R-Ms because they are so underwater
Where is the ethical conflict in doing those commercials? Frankly I’m more angry that Fred played McCain’s stalking horse in the ‘08 primary.
Sounds like a perfectly emotional reaction devoid of logic to me. Jealous that he's making some money?
Ok, so they are slowly taking over your home each time you request some money.
This may not be so bad in a robust economy, but I’ve lost about 200,000 in equity over the past 2 years alone without borrowing a dime, and I’m sure it’s the same all over if not worse. The American dream is turning into a nightmare.
When your equity doesn’t grow, then I don’t think this is a good idea, and I guess Thompson needs to pay off campaign debts.
“So when all of these old people die and suddenly their kids can’t sell their houses to make up the $1 million they owe on their $400,000 homes, blame Fred Thompson entirely.”
Eh? If a lender is stupid enough to lend $1M on a reverse mtg, is he entitled to sue the heirs of the person who mtgd the place? I mean, if you take a rev mtg on your $400k house, and when you die you’ve somehow managed to squeeze $1M out of the lender, he gets your $400k house, right? What if that’s all you had? Your kids owe him something?
Its been running for a few weeks. Before Fred they had Peter Graves, but he passed away. Before Graves, they had Robert Wagner. Fred must believe in this particular company. I can’t imagine he’d sign on if it was not a good thing for people.
There's nothing inherently wrong with reverse mortgages, and for some people they make a lot of sense. Many people end up retired with little or no income and only one big asset: their house. By then, their house is probably even paid for (or nearly so). A reverse mortgage basically lets them sell the house (or a part interest in it) to the company in exchange for a regular monthly payment, and the right to continue to live in the house for the remainder of their lives.
They get the security of a place to live and a regular dependable income for life. The only people that lose out are their beneficiaries, if any. But hey... it's not their money anyway.
Stupid old fool ought to get a reverse mortgage and see how he likes it.
Thank you RobRoy, for setting this thread straight.
There is an awful lot of ignorance on this thread.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.