If You're Not Part of the Solution...

by Peter Bell


A few weeks ago, Illinois Attorney General Lisa Madigan told a group of seniors she is "getting more and more complaints about reverse mortgages all the time."  A month earlier, Attorneys General Kamala Harris (CA) and Catherine Cortez Masco (NV) announced they were combining forces to crack down on mortgage fraud.   In January, a Florida loan officer along with three co-conspirators were sentenced to 24 to 70 months in prison each and forced to pay over $2 million in restitution for a reverse mortgage fraud scheme. And February ended with the sentencing of six reverse mortgage conspirators in Georgia to a combined 30 years in prison for, among other charges, forged deeds, false appraisals, inflated property values and false down payments.

All of this disappointing news comes at a time when we are noticing an overall improvement in the press's attitude towards reverse mortgages.  An informal audit of printed press, visual media and digital media across the country over the past month shows there were 25 positive stories about different aspects of reverse mortgages.  The only negative stories for the month were reports on the Illinois Attorney General remarks and of the sentencing of the Georgia conspirators.

At a NRMLA meeting in Chicago a few years back, a representative of the city's Office on Aging told us that she had 100 cases of elder financial abuse on her desk and more than 50 of them were complaints within families.  Though anecdotal evidence is not the most dependable, it seems to tell us that there are fraudsters who target our product to steal grandma's funds.  It's easy to say, these are not reverse mortgage problems, they are societal problems.  The money stolen could just as easily have been (and often is) from a CD or a Social Security check.  No lender oversees how the funds are controlled once a loan is made. 

Some say we can't cure every ill in society. But I believe that if the product we advocate is an element of financial abuse and fraud, we cannot simply turn our backs on the problem.

As an industry--and as the industry's trade association--we need to confront these problems.  We need to collaborate with personal finance experts, gerontologists and the new multidisciplinary elder abuse centers to figure out how we might devise safeguards.  We need to work with the experts to find  ways to build widespread awareness of the methods of abuse and insulate our clients from those who prey upon them.

Selling a financial product comes with responsibility that extends way beyond closing the deal.