In some ways, I feel like my job as reverse mortgage reporter has been transformed into reporter on reverse mortgage reporting. In other words, there haven’t been too many noteworthy developments in the reverse mortgage industry in the last few months. A slight FHA rule change here. A clarification there. But nothing too substantive, or earth-shattering. This is to be expected, since the product is both relatively niche (only borrowers of a certain age are even eligible, for example) and reasonably straightforward. While the number of mortgage products was recently estimated at more than 1,500, the number of reverse mortgage products is basically 3 (not including private arrangements).

As I was saying, there isn’t much primary reporting for me to these days, only secondary reporting. Still, given that public and professional opinion on reverse mortgages seems to evolve daily, with two very different camps emerging. While there is less and less to be said about reverse mortgages themselves, then, but more and more to be said about what other people are saying about them.

Perhaps this year’s most widely-read report on the reverse mortgage industry was that released by the National Consumer Law Center, entitled “Subprime Revisited.” Since it’s release in October, the report has generated a tremendous amount of buzz for its unequivocal opposition to reverse mortgages, and has been seized upon by members from both sides of the divide for conflicting purposes.

Those looking to strengthen their cases against reverse mortgages have been quick to cite its profiles of borrowers that were blatantly scammed. There are stories of subprime brokers transitioning seamlessly into new jobs selling reverse mortgages, in the wake of the collapse of the housing bubble. These brokers are broadly accused of greasing their own commissions at the expense of borrowers, many of whom remain ill-informed, and are simply happy to receive a pile of money while retaining the right to continue living in their homes. Then there are reports of cross-selling, whereby borrowers are cajoled into buying annuities in conjunction with their reverse mortgages, which in one case yielded less than the interest rate on the reverse mortgage.

Those on the other side of the fence (the majority of which have a vested interest in selling reverse mortgages, it should be noted) have labeled the report a “one-sided editorial with a regulatory policy agenda built on generalizations and extrapolations.” They insist that on the contrary, reverse mortgages are easy to understand, and abuse remains the exception, as “brokers are decent, ethical professionals.” They point to high satisfaction rates and the lack of a major crisis as evidence that the reverse mortgage industry is fulfilling its fiduciary responsibilities to its customers.

As a rejoinder, I would argue that while scams and abuse are still relatively rare, they are on the rise, due to an in increase in the number of unaffiliated lenders (some of which are rightfully accused of employing sub-prime tactics to sell reverse mortgages). In addition, given that the FHA (which insures the majority of reverse mortgages) is on the verge of insolvency, it looks like a crisis is not far off. Finally, satisfaction rates remain high because the majority of borrowers only obtained their mortgages a few years ago. Thus, high satisfaction is to be expected, since these borrowers have only tasted the upside (“free” money) so far. When these loans start coming due en masse (due to borrower death, change of residence, bankruptcy), many of these borrowers will start crying foul and insist that in hindsight, they were duped.

Still, I think that it’s fair to say that the truth probably lies somewhere in between. Certainly, all mortgage brokers aren’t sleazy and all potential borrowers aren’t idiots. The incentives being the way they are, however, you can excuse people for being cynical about the motives of reverse mortgage lenders. On the other hand, with the recent enhancement in reverse mortgage counseling requirements, borrowers may have a more difficult time claiming that they were misled. Whether reverse mortgage mortgages are ultimately appropriate for the average eligible borrower is impossible to say; the best we can hope for is increased transparency and a lack of coercion.