Over the weekend, the New York Times published an article about how more retirees are exploring reverse mortgages as they face declining income, falling home values, and dwindling savings from Wall Street’s meltdown. In The Reverse Gear, journalist Vivian Marino writes that as mortgage financing gets increasingly tougher to obtain, reverse mortgages continue to look more appealing.
“Many seniors have been able to use reverse mortgages to avoid delinquency or foreclosure, and to help fund their retirement,” said Regina M. Lowrie, a former chairwoman of the Mortgage Bankers Association and the chief executive of Vision Mortgage Capital in Montgomeryville, Pa.
One of the bright spots of the article comes from Martin Shenkman, a New Jersey based attorney who specializes in estate and tax planning. Shenkman considers reverse mortgages “a great tool, when the right circumstances exist.” He even acknowledges that the reverse mortgage industry has come a long way in attracting business and burnishing its reputation, which was full of stories from years past of lenders preying on the elderly.
The comment from Shenkman is one of the first times I’ve read anyone outside our business mention that the industry has come a long way in improving its reputation. Not that I wasn’t aware of everything being done, but hearing people outside the business take notice is definitely positive.
The article also points out the growing interest in the ability to use a HECM on co-ops. Mark Draper, a senior loan officer for the reverse mortgage department at Regional Home Mortgage, says he is adding at least one client a week who wants to take advantage of the new feature once HUD issues the mortgagee letter.
Not surprisingly, it does mention that some co-ops are apprehensive. “If someone is in that position, they are obviously in need of cash,” said Daniel DiBenedetto, the co-op board president at 15 West 11th Street in the East Village. He expressed doubts about a reverse mortgage as a permanent solution to financial problems.
But Elliot Meisel, a real estate lawyer from Manhattan, says that co-ops can easily monitor such borrowing. “I would encourage boards to permit them with appropriate safeguards and tight controls and oversight,” he said
It’s a good read, definitely worth the time.