Tuesday, April 24, 2018
Editorials

Editorial: Floridians vulnerable on reverse mortgages

When financial instruments are backed by government money, regulators have twin obligations to make sure they are sound: to protect consumers and taxpayers' liability. When it comes to reverse mortgages, those protections appear lacking on both fronts, leaving too many Floridians vulnerable to overzealous pitches and taxpayers too often picking up the tab. It's time for the federal government to get serious about ensuring that homeowners know all the risks when they sign up for a reverse mortgage.

At the onset, reverse mortgages may seem like a simple, quick fix to money problems. But in reality they are complex deals that could leave homeowners owing more than their home is worth or facing foreclosure.

The Tampa Bay Times' Susan Taylor Martin reported last Sunday that reverse mortgages peaked in 2009 at nearly 115,000 as homeowners struggled during the recession. Touted by pitchmen such as actors Henry Winkler and Fred Thompson, the mortgages allow homeowners 62 and older to cash in their house's equity and stop making monthly payments. Upon death, homeowners' heirs can sell the house, pay off the reverse mortgage and keep any remaining money. If they cannot repay, the federal government picks up the tab. Borrowers risk default and foreclosure if they move or fail to pay property taxes or insurance.

The federal government requires credit counseling for potential borrowers before it approves a reverse mortgage. But large numbers of defaults in the Tampa Bay area alone suggest that tactic has done little to protect homeowners. Fran and Kenny Goodnow of St. Petersburg are a textbook example of what can happen when reverse mortgages go wrong. The couple bought their Kenwood home in 1989 for $40,000. After refinancing their home years earlier, the couple entered into a reverse mortgage agreement with James B. Nutter & Co. The company paid off the couple's $153,700 existing mortgage. When the Goodnows missed several insurance payments, the lender demanded they repay $217,000. In ill health and unable to pay, the couple, ages 71 and 87, must leave their home by July 25. Although they met with a credit counselor prior to obtaining a reverse mortgage, the Goodnows say they did not understand their obligation. Sadly, their story mirrors that of thousands of Floridans and other seniors nationwide.

Reverse mortgages can benefit seniors in need, but they are rife with potential pitfalls. They are best utilized by people who fully understand the risks and have the ability to be able to keep up with property tax and insurance payments. Young borrowers, those who plan to move soon or with uncertain income in the future are not good candidates. The government needs to ensure those messages are getting delivered because frankly, it's not in the lender's interest to do so.

When a borrower defaults on a reverse mortgage, lenders get repaid by the federal government, which ultimately passes the cost to taxpayers. That's a breeding ground for exploitation. Lenders must be required to be transparent and government needs to make sure that translates into borrowers fully understanding that what folksy pitchmen bill as a safe, financial windfall could actually be a cyclone if they are unprepared.

Comments
Editorial: As USFSP consolidation task force meets, openness and collaboration are key

Editorial: As USFSP consolidation task force meets, openness and collaboration are key

Writing a new law that phases out separate accreditation for the University of South Florida St. Petersburg and folds it back into the major research university was the easy part. The hard work starts today when a new consolidation task force holds i...
Updated: 7 hours ago

Correction

CorrectionCircuit Judge John Stargel of Lakeland is a member of the Florida Constitution Revision Commission who voted against a proposed amendment that would have stopped write-in candidates from closing primary elections. An editorial Saturday inco...
Published: 04/23/18
Editorial: Pruitt sets new low for ethics at EPA

Editorial: Pruitt sets new low for ethics at EPA

Not too many people took then-candidate Donald Trump seriously when he famously campaigned to "drain the swamp" as president. But that shouldn’t give this administration a free pass to excuse the behavior of Scott Pruitt, the administrator of the Env...
Published: 04/22/18
Updated: 04/23/18
Editorial: Allegiant Air still has safety issues

Editorial: Allegiant Air still has safety issues

Allegiant Air’s safety record remains troubling, and the Federal Aviation Administration’s reluctance to talk about it is no more encouraging. Those are the key takeaways from a 60 Minutes report on the low-cost carrier’s high rate of mid-flight brea...
Published: 04/21/18

Editorial: Women’s work undervalued in bay area

Even a strong economy and low unemployment cannot overcome the persistent pay gap affecting full-time working women in Florida. A new report shows women in Florida earned 12.5 percent less on average than their male counterparts, and the disparities ...
Published: 04/21/18
Editorial: Florida’s death penalty fading away on its own

Editorial: Florida’s death penalty fading away on its own

Florida lawmakers may never take the death penalty off the books, but stronger forces are steadily eroding this inhumane, outdated tool of injustice. Court rulings, subsequent changes to law and waning public support have significantly suppressed the...
Published: 04/20/18
Updated: 04/24/18

Editorial: A missed chance for open primary elections

The Florida Constitution Revision Commission did a lot of things wrong this week by combining unrelated or unpalatable provisions into single amendments that will appear on the November ballot. It also wasted an opportunity to do one thing right. The...
Published: 04/20/18
Updated: 04/23/18
Editorial: New Cuba president is chance for new start

Editorial: New Cuba president is chance for new start

For all the symbolism, Raul Castro’s handoff of the Cuban presidency this week amounts to less than meets the eye even if his handpicked successor, the Communist Party functionary Miguel Diaz-Canel Bermudez, is the first person not named Castro to le...
Published: 04/20/18
Editorial: When they visit Nature’s Classroom, kids are right where they belong

Editorial: When they visit Nature’s Classroom, kids are right where they belong

The Hillsborough school district planted a fruitful seed with the opening of Nature’s Classroom five decades ago on the cypress-lined banks of the Hillsborough River northeast of Tampa. • The lessons taught there to some 17,000 sixth graders each yea...
Published: 04/20/18

Editorial: Equality pays off on Southwest Flight 1380

The passengers of Southwest Flight 1380 can be thankful that, 33 years ago, the U.S. Navy took the lead on equal opportunity.Capt. Tammie Jo Shults was piloting the flight from New York to Dallas on Tuesday when an engine exploded, blowing out a wind...
Published: 04/19/18
Updated: 04/20/18