Pros / With one exception, they serve up loans nationwide.
Cons / Consumer complaints share a common theme around lengthy process, abundance of paperwork, and relatively aggressive marketing.
Verdict / One of the bigger, best known names in reverse mortgages, AAG provides the gamut of loan options and a wide area of coverage (minus Massachusetts). Leader in volume of loans served.
It's no coincidence American Advisors Group is both the reverse mortgage company you're most likely to have heard of and the biggest provider of this type of loan. Since its founding in 2004, the Southern California-based company has long relied on advertising (in particular, those Tom Selleck TV commercials) to fuel its growth. After major banks like Wells Fargo opted out of the reverse mortgage business, AAG rose to the top, in terms of volume of loans originated each year.
AAG is licensed to service the federally backed Home Equity Conversion Mortgages (HECM) in all states except Massachusetts (more on why later), plus Washington, D.C. The company is a member of the National Reverse Mortgage Lenders Association (NRMLA).
There are certain advantages to being a huge company, from being able to recruit experienced employees to designing a clear, easy-to-use website. On the AAG site you can either enter your information right away to get targeted information, or get around all those personal questions (just click back to the logo up top) to explore it on your own first. You can find an FAQ page packed with general information on reverse mortgages. A reviews page features mostly positive reviews verified by TrustPilot.
The Better Business Bureau has another 223 positive reviews from customers who have worked with AAG, but the 31 negative and 6 neutral reviews shed light on the downside of applying for any reverse mortgage (there is a lot of paperwork involved and it takes a long time) and of working with AAG in particular. It seems the company hits customers with a lot of marketing, for one. Another complaint is customer service personnel were unable to answer specific questions. Some customers said they paid for appraisals and waited for months before hearing that the lender was awaiting paperwork the customer was unaware of. All of this means that AAG's BBB rating is currently an A-.
Aggressive marketing tactics got AAG in hot water a few years ago. In 2008, Massachusetts revoked the company's right to lend in the state, citing misleading advertisements that presented HECM loans as a government benefit. In 2016, the Consumer Financial Protection Bureau charged that AAG's ads (along with Reverse Mortgage Solutions and Aegean Financial) were not adequately informing potential borrowers that they could lose their home if they fell behind on taxes and homeowners insurance. AAG entered into a "consent order" agreeing to make clear and prominent disclosures in its ads. Of the 2,533 complaints about reverse mortgage lenders gathered on the CFPB website since 2011, 137 of them are about AAG, with similar complaints to those that appear on BBB site. Considering they originate about 600-1000 loans a month, that's still a pretty small amount.
Available HECM Products
Fixed-rate lump sum disbursement: The interest rate remains the same for the life of the loan (great if it's low when you apply), but you can only receive your loan in one lump sum, which will be determined by your home equity, your age, and the first-year draw limit (60 percent of the loan total).
Adjustable-rate term disbursement: You can receive the amount of your loan in fixed monthly payments for a set number of months, but the interest rate will be variable from year to year or month to month, based on the London Interbank Offer Rate (LIBOR).
Tenured: You can receive a set amount of money from your loan every month for the life of your loan (calculated by assuming you will live to 99), and the rate varies based on the LIBOR.
Line of credit: Instead of receiving your loan payment upfront, you can leave it as a line of credit, and the amount you don't draw down will grow with compound interest each year, based on the LIBOR.
Combination: This adjustable-rate loan can be a combination of all of the above, at the adjustable rate based on LIBOR.
HECM for Purchase: This type of loan allows you to buy a new home directly with a reverse mortgage.
Proprietary Reverse Mortgages
In some states, AAG offers AAG Advantage, which is a reverse mortgage that is not backed by the FHA, also known as a jumbo reverse mortgage. These loans are not subject to HUD’s many restrictions, such as the home value cap of $679,650, but that also means borrowers aren't protected if their homes fall below the value of the loan when they become due.