These days it’s pretty rare to come across a balanced article on reverse mortgages but Housing Wire’s Kelly Curan does a great job describing the state of the industry and the challenges it faces.
Instead of re-hashing the story here, HousingWire was happy to provide RMD readers with access to the article which is only available to its magazine subscribers. Below is the first couple paragraphs but be sure to read the rest of the article here.
Amid the ailing economy, Americans of all ages are finding themselves strapped for cash, forced to realign financial plans —some are even dipping into retirement funds. Older Americans may face more crucial decisions than younger generations, however, as they typically have less time to recover should they make any unintended financial blunders.
For this very reason, financial products that have the potential to rearrange a senior’s finances or change their source of cash flow are never without a fair share of coaches… and critics. And reverse mortgages are certainly one of those products.
Despite having been in existence for over twenty years, the reverse mortgage product has rallied increasing hype across the nation recently. Some brokers of these types of mortgages say this product is a necessary step to increase borrower cash flow in retirement or to avoid financial troubles, while some asset managers and others voice concerns—one of those concerns being predatory lenders who prey on senior citizens, using reverse mortgages as bait.
Nonetheless, a growing number of older Americans are securing reverse mortgages according to Home Equity Conversion Mortgage (HECM) data recently released by the U.S Department of Housing and Urban Development (HUD).
Wells Fargo witnessed a spike in activity as well. And “we believe there are three primary reasons for the growth,” says Tim McDonald, head of the Reverse Retail team at Wells Fargo Home Mortgage. There is a greater awareness, understanding and acceptance of the product by seniors and those who advise them, says McDonald—although, not all professionals agree.
And there’s an aging population that can benefit from such a product as it does its best to navigate the tough economy. There has also been a broad-based effort of recent to educate and promote the advantages of a reverse mortgage, he says.
And that education is absolutely necessary says David Bancroft, president of Omni Reverse, who believes there’s an “incredible” amount of education that’s still needed, even for housing and financial industry professionals. “It’s human nature. If you don’t understand something, you fear it,” Bancroft says. “And if you fear it, you put a negative connotation to it.” When in fact, Bancroft says the satisfaction rate for Americans who opt into a reverse mortgage is through the roof, sitting near 92%.
On a side note, if your looking for someone to keep you up to date on what’s happening in the “forward” world, you need to read Housingwire.