The reverse mortgage industry is perhaps overly familiar with having a need to fact-check certain claims about the product category made by financial commentators, some of which are very well-known by the general public while others are simply ubiquitous enough to warrant the need for competing educational materials. However, one reverse mortgage industry professional has taken particular issue with personal finance personality Dave Ramsey’s consistent critiques of the reverse mortgage product, and has elected to rebut some of his common claims.
Harlan Accola, national reverse mortgage director at Fairway Independent Mortgage Corporation, recently wrote a column for Nasdaq.com squarely aiming at assertions that Ramsey has made in the past about reverse mortgages.
“Many Ramsey listeners who would be ideal candidates for the product are aggressively steered away, as he repeatedly calls it a scam,” Accola writes. “This ‘scam’ has been enjoyed by homeowners who overwhelmingly rate they are ‘satisfied’ or ‘highly-satisfied’ with the results. Nevertheless, many older Americans are being hurt by Dave Ramsey’s continued misinformation and lack of knowledge about the product.”
Among the assertions that Accola takes issue with, he points to a social media post made by Ramsey in July which says, “THERE’S NO SUCH THING AS GOOD DEBT.” [sic]
“The fundamental conflict between the reverse mortgage and Dave Ramsey is his overzealous hatred of debt,” Accola says. “I get it, and for the most part, I agree. Many people in this country are over leveraged with credit card debt and we know that is dangerous.”
However, “leverage” as a concept is overlooked, Accola says, as well as another component in the details behind Ramsey’s own assertions, he explains.
“I believe the CFO of every Fortune 500 company would respectfully disagree, because [they] understand leverage,” Accola says. “This is no different in the mortgage world. Ironically, Dave Ramsey is a paid lead provider for Churchill Mortgage, a well-respected mortgage firm. However, 100% of their business uses debt to achieve the dream of home ownership. Apparently there is ‘good debt’ that can be properly used.”
Accola additionally takes issue with several individual claims that Ramsey makes about reverse mortgages, including the description of over 100,000 reverse mortgage loans as having “failed.”
“Yes, in the aftermath of the housing meltdown 12 years ago there were about 100,000 foreclosures that involved homeowners that had reverse mortgages. However, those foreclosures were not failures of the reverse mortgage,” Accola says. “Almost all those foreclosures occurred from 2008-2012, and almost all of them were what we would describe as ‘beneficial’ or ‘neutral’ foreclosures from the borrower’s perspective.”
Read the column at Nasdaq.com.
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