Reverse Mortgage Professional Reality-checks Product Claims by Dave Ramsey
The reverse mortgage industry may be too familiar with the need to review certain claims made by financial commentators about the product category, some of which are well known to the general public while others are simply ubiquitous enough to warrant the need for competing educational materials. However, one expert in the reverse mortgage industry looked specifically at the persistent criticism of the personal finance personality Dave Ramsey of the reverse mortgage product and chose to refute some of his general allegations.
Harlan Accola, National Reverse Mortgage Director at Fairway Independent Mortgage Corporation, recently wrote a column for Nasdaq.com directly targeting claims Ramsey made in the past about reverse mortgages.
“Many Ramsey listeners, who would be ideal candidates for the product, are aggressively distracted as he repeatedly calls it a scam,” writes Accola. “This ‘scam’ has been enjoyed by homeowners who overwhelmingly say they are ‘satisfied’ or ‘very satisfied’ with the results. Even so, many older Americans are affected by Dave Ramsey’s persistent misinformation and lack of knowledge about the product. “
Among the claims that Accola questions, he points to a July social media post by Ramsey that said, “THERE IS NO GOOD DEBT.” [sic]
“The fundamental conflict between reverse mortgage and Dave Ramsey is his overzealous hatred of debt,” says Accola. “I understand, and for the most part I agree. Many people in this country are overindebted with credit card debt and we know that this is dangerous. “
However, “leverage” is an overlooked concept, Accola said, as well as another component in the details behind Ramsey’s own claims, he explains.
“I think the CFO of any Fortune 500 company would respectfully disagree because [they] Understand leverage, ”says Accola. “It’s no different in the mortgage world. Ironically, Dave Ramsey is a prime paid provider to Churchill Mortgage, a reputable mortgage lender. However, 100% of their business is using debt to help make their home dream come true. Apparently there is ‘good debt’ that can be used properly. “
Accola also objects to several individual claims by Ramsey regarding reverse mortgages, including describing over 100,000 reverse mortgage loans as “failures.”
“Yes, after the real estate meltdown 12 years ago, there were about 100,000 foreclosures involving homeowners who had reverse mortgages. However, these foreclosures were not reverse mortgage failures, ”says Accola. “Almost all of these foreclosures occurred between 2008 and 2012, and almost all of them were what we would call ‘beneficial’ or ‘neutral’ foreclosures from the borrower’s perspective.”
Read the column on Nasdaq.com.