The reverse mortgage industry is perhaps all too familiar with the need to fact-verify certain product category claims made by financial commentators, some of which are very well known to the general public, while others are simply widespread enough to warrant the need for competing educational materials. However, one reverse mortgage professional expressed particular concern about the consistent criticism of personal finance Dave Ramsey’s reverse mortgage product and decided to refute some of his general claims.
Harlan Accola, national director of reverse mortgages at the Fairway Independent Mortgage Corporation, recently wrote a column for Nasdaq.com directly addressing allegations Ramsey has made in the past regarding reverse mortgages.
“Many of Ramsey’s listeners, who would be ideal product candidates, are aggressively kept away as he repeatedly calls it a scam,” writes Accola. “This scam is used by homeowners who overwhelmingly believe they are“ satisfied ”or“ completely satisfied ”with the results. However, many older Americans suffer from Dave Ramsey’s ongoing misinformation and lack of product knowledge. ”
Among the statements that Accola disagrees with, he points to social media post made by Ramsey in July, which says “NO SUCH A GOOD DEBT.” [sic]
“The fundamental conflict between reverse mortgage and Dave Ramsey is his excessive hatred of debt,” says Accola. “I understand and mostly agree. Many people in this country are overly borrowed from credit card debt, and we know this is dangerous. “
However, “leverage” as an overlooked concept, says Accola, as well as another component in the details underlying Ramsey’s own claims, he explains.
“I believe the CFOs of every Fortune 500 company respectfully disagree because [they] understand leverage, ”says Akkola. “The mortgage world is no exception. Ironically, Dave Ramsey is the leading paid provider of Churchill Mortgage, a respected mortgage firm. However, 100% of their businesses use debt to fulfill the dream of owning a home. Obviously there is ‘good debt’ that can be used appropriately. “
Accola also objects to several of Ramsey’s individual reverse mortgage claims, including description of over 100,000 reverse mortgages as “insolvent”.
“Yes, since the housing collapse 12 years ago, there have been about 100,000 foreclosures involving homeowners who had reverse mortgages. However, these foreclosures were not a failure of the reverse mortgage, ”says Akkola. “Virtually all of these foreclosures occurred in 2008-2012, and almost all of them were what we would call ‘profitable’ or ‘neutral’ foreclosures from the perspective of the borrower.”
Read column at Nasdaq.com.