Dear Fred,

It’s weird when a well-known actor like you becomes a spokesperson. I’m not sure what’s going on: Are you vouching for the product or are you just pretending? In your reverse-mortgage ads, are you speaking to homeowners 62 and older as the actor from Law & Order? Or as a former U.S. senator?

When a person is struggling financially, cash infusions tend to sound like the solution, but reverse mortgages don’t usually turn out to be the best alternative. U.S. senators are supposed to be smart, so I’m thinking you know that. I understand that you’re a caveat emptor kind of guy, but does that absolve you of responsibility for the financial mayhem wreaked by reverse mortgages? (Don’t get me wrong: It would be great if we could all just be responsible and make sure we aren’t taken advantage of. I mean, really. That would be great.)

People who are hooked by your ads are living with the thermostat turned way down, Fred. Even if they get a reverse-mortgage loan, they may not hang on to their homes for long, because they’ll still have to pay taxes, insurance and upkeep—or their home will be sold to pay off the loan and all its related fees and charges. A year in a nursing home also triggers a home sale.

Does that worry you, Fred? Do you feel even a little bit bad about the script’s reference to President Reagan—the one that makes it sound as if The Gipper were personally blessing every loan? Because the FHA reverse-mortgage bill Reagan signed into law in 1988 does more to protect the lender than the homeowner. It allowed for reverse mortgages to be insured by the FHA, meaning the lending institution would not lose money. Once there was no financial risk for lenders, they started pushing the loans aggressively. Now there are even reverse mortgages that enable seniors to buy new homes.

I guess this is just how the snowball of free-market decadence rolls, Fred. Lenders have created increasingly alluring reverse-mortgage products that correspond to the needs and desires of seniors. Oversights were built into reverse-mortgage legislation, but they seem to have been looking the other way as the popularity of the loans has soared, along with defaults and heartbreak stories.

The FHA got its own $1.7 billion cash infusion from the Treasury in September to cover projected losses in reverse-mortgage programs. Guidelines for the loans have been tweaked, but in a manner designed to keep the snowball rolling. Because, as should surprise no one, Wall Street is funneling investor dollars into securitized bundles of these government-backed loans, and the Ginnie Mae Home Equity Conversion Mortgage-Backed Security (HMBS) Program aims to make sure that investor demand is met with ample supply. Meanwhile, many of the individuals who get reverse mortgages would have been better off selling their homes, getting more conventional loans or taking in roommates instead.

So how does it feel to be designated spokesperson for something that’s usually a bad idea? You aren’t selling hot dogs in these commercials, Fred. You’re inviting the viewer to enter into a confusing transaction that trades home equity and ownership rights for cash. And you’re backing this BS with the full faith of an actor and the credit of a former U.S. senator. It makes me want to cry and throw up, both at once.

Sincerely,

Liz Main

PS: Henry Winkler also touts reverse-mortgage loans in TV ads. I hope viewers remember that The Fonz had a toilet for an office.

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