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?
First of all, did you know that reverse or "lifetime" mortgages are the hot new thing for investors lookin' for a high yield on mortgages-backed securities? It's true! MarketWatch tells us this today. Basically, people over 62 tap into equity on houses that they own, or have a lot of equity in. (We're going to go out on a limb and suggest that these standards may slide as time goes on?) The upfront fees have gone down in recent years, and the idea is that old people, who have to contend with rising health and cost-of-retirement issues in their golden years, can get long-term loans to pay for stuff and then just leave their spoiled children to sell off the homes at (hopefully!) higher prices after they die, which they will. They always do.
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."
THERE'S NO RISK! Oh god. This is going to blow up the economy again, isn't it? Like, within a week, right?
114,692 reverse mortgages were made in fiscal year 2009, compared to 157 in 1990, when people had actual money.
But would ex-Senator Fred Thompson, America's most trustworthy conservative political figure, endorse financial products from a company of sleazy repute?
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.
They were saying that Obama will give them free money, essentially. At least Fred Thompson omitted the word "Obama," who is a communist.
And two years ago, the state of Massachusetts gave AAG a cease-and-desist order for deceptive marketing practices.
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. Also: if you're going to get a reverse mortgage, find a good lawyer, maybe? No, not Fred Thompson!