Unsuitable Annuities Tied To Reverse Mortgages

July 10, 2009 • Page 2 of 2

In California, two insurance agents allegedly designed a seminar to teach licensed insurance and real estate agents. They are charged with teaching agents to convince senior homeowners that purchasing an annuity with reverse mortgage funds is a condition for obtaining that loan.

These examples may just be the tip of the iceberg on unsuitable reverse mortgage cross-selling. FINRA, according to the report, doesn't track the origin of funds for unsuitable annuity sales. And 14 of 29 insurance regulators responding said they lacked searchable complaint databases.

The GAO report also calls for improved controls over HUD reverse mortgage counseling, and it detailed deceptive reverse mortgage marketing claims.

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2 Comments

Comments

mesofun 14 years ago

Who will stop the idiots!!

Okay, so what I've read is that a HUD ruling states that "A LENDER CAN'T BE ASSOCIATED WITH ANY OTHER FINANCIAL OR INSURANCE PRODUCT". So then, that means that Bank of America, Chase, Wells Fargo & others are all completely and totally breaking the law!!!!!!!!! I mean, doesn't Wells Fargo have Wells Fargo Advisors????? WHO ARE THESE FREAKIN IDIOTS WHO THINK CROSS-SELLING SHOULD BE ILLEGAL??!! Certainly there are some unsuitable situations out there but take a look at this... If a person had taken $20,000 out of there home 3 years ago before the catastrophic home prices collapse and placed that money into a fixed annuity, they would have some money today through being well diversified (home & investments). BUT NO!!! The government says you must keep all your money in your home and you must not ever purchase any life insurance or an annuity. My God how I wish an attorney would rip these idiots apart. The big insurance companies need to kill these morons rather than hide from them in trying to be compliant. It is not a good thing to be compliant with idiocracy.
rsf8 14 years ago

Unsuitable Always?

The safest Reverse Mortgage product is the fixed interest rate version. The only payout option is a lump sum. The client needs lifetime income. Maybe they should put the money into a "safe" CD or MM account. But wait, that does not accomplish the clients goals. Last I checked, an immediate annuity was the only answer. But I guess the government knows best and the annuity would be unsuitable! OBTW, your home and it's mortgage are usually the largest financial related issues people deal with. I guess it would be prudent to keep those parties separate (Reverse Mortgage originators and Financial Planners). I mean come on now, you wouldn't want your doctor talking to the pharmacist or your accountant communicating with your attorney, right?Remember the saying, "never say always"!

Unsuitable Annuities Tied To Reverse Mortgages

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