New Insurance Agency Launches Reverse Mortgage Affiliate

image LTC Financial Partners (LTCFP) announced the formation of an affiliate that will provide reverse mortgages to consumers.

"We’re delighted to add this new service to our corporate offerings," says Cameron Truesdell, CEO of LTCFP. "Now we can help more people breathe easy, knowing they’ve got the means to pay for care when needed."

Reverse Mortgage Direct will be lead by John Stephens as President and will emphasize two particular uses. 

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“The first is to help the thousands of senior home owners that contact LTCFP every year that don’t qualify for long term care insurance,” said Stephens.  “Now they can create a fund of money using a reverse mortgage to help with the costs of long term care, and this helps them stay in their homes longer too.” 

Stehpens added that the second vital use is to “help the millions of senior home owners on a fixed income that have lost a significant amount in the stock market; with a reverse mortgage, they can recover some of their spending power and financial security." 

The Housing and Economic Recovery Act of 2008 provides additional protections for seniors who take out a reverse mortgage by barring certain arrangements that may provide incentives for the sale of other financial or insurance products that do not meet their needs.

It will be interesting to see how affiliates like Reverse Mortgage Direct operate within these requirements.

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  • It sounds fantastic to me, I think anytime you make LTC insurance available to someone who may need it, it is a great thing, but how do you get around the recent regulations that prohibit guiding the Reverse Mortgage proceeds in any way?

    • Michael,

      LTCi is not like HECMs. Ultimately HECMs have only one insurer, FHA. LTCi is only as good as the insurer which provides it.

      Like HECMs, not only does LTCi have different pricing, but unlike HECMs, the benefits can vary greatly. There are those who need LTCi but end up with the wrong product. Then there are those who need it but should not have it because they need the benefits of Medicaid.

  • Admin quotes Mr. Stephens giving two reasons for forming the reverse mortgage unit. “The first is to help the thousands of senior home owners that contact LTCFP every year that don’t qualify for long term care insurance….” Whether Mr. Stephens would describe this as a misquote or a misstatement it is nonetheless a revealing statement.

    Like some lawyers say when they have listened to a spurious sounding statement: “That comment just doesn’t smell right.” If this were 2001 or earlier, the reason would be entirely understandable. Now with so many lenders and so many reverse mortgage loan officers underemployed, does this statement say far too much? It has all of the markings of saying: “We’ve had trouble with underwriting and want a friendly environment to provide HECM financing for LTCi.” Or “we are tried of seeing other firms profit at our expense….”

    At the time MetLife acquired the BNY Mortgage unit at EverBank, there was no HERA. Cross selling even though addressed by NRMLA was hardly the issue it became in 2008. MetLife was more than familiar (or should have been familiar with them) with internal control, firewalls, and other means to keep operations separate for at least decades. Can the same be said for this business? Mr. Stephens’s statement does not seem to recognize his responsibility as the chief officer of the new unit for owning and safeguarding the standards required in HERA.

    Mr. Stephens needs to be far more sensitive about the illusion of cross selling in the remarks he makes.

    • Not knowing the principles involved in this company, I would advise people interested in LTCI, to seek one from pure LTC purveyors. Then, if indeed there is none available, they then should consider the RM option.— Two separate searches, no one-stop shopping.
      I also wonder, how are the RM proceeds used (which option?) for LTC?

  • An agent with them had told me about this development. The agent also told me that they were asking all their insurance agents to market the reverse mortgages. When I explained about the cross-selling regulations this agent’s response was that is why they will not be marketing reverse mortgages.

    Besides the cross-selling regulations, states, at least some, require that anyone marketing or presenting on reverse mortgages to prospective borrowers be licensed as a mortgage broker. I see this as a huge compliance issue and a mess for states to try and keep up with regulating and the licensing.

  • Critic,
    Thank you for your input into our business model but unfortunately you made several assumptions that are not accurate. I would like to give you some background on LTCFP and the new company that we have started. LTCFP is one of the largest and most experienced long term care brokers in the US. The only misquote in the first paragraph is that there are thousands per month not per year and that is just the people who contact them that do not qualify because of health issues. In putting together this new business and talking to many of the 500 agents they have doing exclusively long term care insurance, very few knew what a reverse mortgage was, so your characterization of the motive is very inaccurate. Unlike some companies that advertise on this blog we will not be allowing any individuals that sell any other financial products or insurance to be employed by Reverse Mortgage Direct.

    I also noticed you responded to the previous posters response and talked about the benefits of Medicaid. There are several reasons that a person that owns a home would want to use a reverse mortgage to pay for their long term care costs instead of using Medicaid. In home health care, choice, and quality of care to name a few. Remember states are required to recover assets from the estates of people who use Medicaid. There are of course ways around that but some people either don’t know about them or are more concerned with quality of care.

    If you wish to discuss this in more detail please email me at josh@reversemortgagedirect.net

  • I cannot help but wonder if Mr. Stephens is even aware of the ban on cross selling.

    As I read this press release it apppears as though he is not and therefore, I can understand him making uninformed but still reckless comments.

    If he is aware of the ban, then his comments are completely irresponsible.

  • It never ceases to amaze me. As soon as someone or some company attempts to do something positive with a reverse mortgage outside the simple refinance there is always negative comments. Like it or not, admit it or not, the reverse mortgage can and will be a very large factor in solving the long term care crisis facing the seniors of this nation.
    Mr. Stephens was not misquoting or being reckless when he said “The first is to help the thousands of senior home owners that contact LTCFP every year that don’t qualify for long term care insurance,” he then further explained with “Now they can create a fund of money using a reverse mortgage to help with the costs of long term care, and this helps them stay in their homes longer too.”
    I was just introduced to a self funded LTCI product by one of my referral sources that pays out a multiple of that investment in long term care benefits. It is a fantastic option for those “who don’t qualify for LTCI” and the reverse mortgage is a very good option to fund it.
    Kudos to LTC Financial Partners!

    • help the thousands of senior home owners that contact LTCFP every year that don’t qualify for long term care insurance,”

      Bells are going off. If there are “thousands” that can't get LTCI, then he must have hundreds of thousands coming in the door who can get it. My advice sell LTCI and stay out of RMs if he is that great a prospector. At a minimum, he wouldn't have the time to do RMs. Puhleez.

    • Michael,

      My statement was: “Whether Mr. Stephens would describe this as a misquote or a misstatement it is nonetheless a revealing statement.” Let me go over this very slowly. This statement means that Mr. Stephens might claim that Admin misquoted him or that he (Mr. Stephens) had misstated what he (Mr. Stephens) intended.

      It never amazes me how people people get so excited about LTCi that they jump off the deep end by saying things like: “Mr. Stephens was not misquoting….” No one in this thread ever accused Mr. Stephens of misquoting anything. The only thing that was questioned is if Mr. Stephens might claim he was misquoted.

      If this is self-funding long-term care scheme is VEBA related, then let me be the first to inform you, it is a very, very old idea. You might want to describe the financial device that is used to avoid income tax. Even though I am not a young man, I can always use some advice on new twists. Please elaborate on this new idea.

  • Sorry Mr. Banner, but announcing that you are starting a reverse mortgage business to help support your long term care insurance business is 100% reckless!

    Quite frankly, with all of the attention on the ban of cross-selling, especially long-term care policies, I am stunned at your support.

    • reversemaniac,

      You are so right. It is hard to believe that within a year and one-half after HERA, people are congratulating others about potential violations of the cross-selling rules. It is stunning.

  • Very interesting subject. I have been promoting (with minimum success) reverse mortgages as a LTC solution the last three years. I do not feel that cross selling is a problem if you stay away from investment type insurance products.

    I would like to hear more about self funded solution that M Banner is using. I could use another option as underwriting and cost make for a tough sale with traditional LTC.

  • Hey Critic! You never miss an opportunity to live up to your name. I understand that there are different LTC insurers and policies, but there is a clear difference between directing RM proceeds to a deffered annuity and to a LTC product. Despite your never-ending criticsm and sarcasm, I would be hard pressed to berate someone for buying a LTC policy with their RM proceeds. If LTCFP can find a way around the cross-sell issue, kudos to them.

    • Clarification. This outfit says they are going to get RM monies to set up funding for long-term-care expenses, NOT to buy insurance. That bothers me. A lump of money (not tenure or LOC) is tempting to anyone.
      Also, critics are needed to keep us all honest and to punch holes in schemes.

      • dduck12,

        I went to their website and here is what it says about the company:

        “LTC Financial Partners, LLC

        One of the nation's most experienced long term care insurance agencies”

        I found that a most illuminating statement about what it does.

    • Michael,

      LTCi is not like socks where one size fits all. There are deferred annuities that are fully warranted and there are LTCi policies that do not match the needs of the purchaser. It is all a question of suitability.

      You are far too experienced to be sounding like someone who just finished LTCi traning with his insurance company. Cross-selling is a very serious issue and is not something that our industry or any member of it is encouraging. I find that remark less than responsible.

      It is remarks like this that will lead to further restrictions by one of the avid readers of this website, the staff of Senator McCaskill. This is not tax law where we should be seeking loopholes. If cross-selling is wrong, it should be condemned. You and I are of entirely different opinions on this issue.

  • Michael, I agree with everything you wrote but if they have found a way around the cross-sell ban, then they should have stated so in their press release.

  • It is generally a bad idea for low-wealth seniors to use a reverse mortgage to finance long-term care insurance (nursing home) policies. If all that a low-wealth senior has is a home, then he or she (more likely than not) will qualify to have Medicaid cover the cost of their nursing home care. If he or she qualifies for Medicaid without needing a LTC insurance policy, then it would be absurd for them to get a policy, especially if they used a reverse mortgage loan to finance the product. A real downside for the seniors who would otherwise qualify for Medicaid without having long-term care policies is they can actually end up disqualifying themselves from Medicaid down the road. After being out of the home for 12 months the RM is due. Once the RM comes due the house will be sold to pay back the loan. With the remaining proceeds the individual will likely be over the allowable asset level and will not qualify for Medicaid. Medicaid rule of thumb: The home is exempt – cash is counted. Seniors with houses qualify for Medicaid. Cash received from a house that has been sold will not be exempt for purposes of qualifying for Medicaid. Long-term care insurance is not for low-wealth seniors and insurance agents shouldn’t push them into reverse mortgages as a means to finance unsuitable transactions. Low-wealth seniors who use reverse mortgages to finance nursing home long-term care insurance are needlessly diminishing their estates.

    • Low-wealth seniors”

      Agreed. However, my nose, and what is stated above, says that some “people'' urging the use of RMs may be after the money, not for LTC insurance but for “other” uses.
      P.S. There are some folks, even in their 50s, that wish to be independent and not rely on Medicaid, or don't qualify, that want and should have LTCI (it is not, BTW, nursing home insurance, as most people wish to, and do, stay at home.)
      But, THIS IS NOT the case presented above, this is a fund for expenses, they claim.

    • Mr. Cole,

      You need to do an article on this subject for our industry. I will be happy to help you get it posted. I will call you about it later.

  • ***I was just introduced to a self funded LTCI product by one of my referral sources that pays out a multiple of that investment in long term care benefits. It is a fantastic option for those “who don’t qualify for LTCI” and the reverse mortgage is a very good option to fund it.***

    self funded but it needs the RM to provide the funds- I'm sure FINRA and Consumer Reports is dying to hear about that

      • dduck12,

        I could not agree with you more.

        If this is a VEBA, it is interesting but its track record goes all over the map, some good, some bad; it all depends…. If it is, I'm sure like some of the comments above, it is veiled in great mystery.

  • You guys just love jumping on an idea you don't understand. First, they're not selling these folks insurance, so where does the cross-selling ban come in? They're providing them the funds to self-insure, so that they can receive care in their home and not rely on medicaid. Besides, in recouping money spent on a recipient, Medicaid may go after the home anyway.

    Secondly, this is an insurance broker starting a subsidiary to sell reverse mortgages. Isn't MetLife in this business? Isn't Financial Freedom owned by a bank? Isn't Genworth owned by a bank? BankAmerica have a brokerage subsidiary?

    And lastly, since this is still a free country, the HERA ban on cross-selling puts barriers in place as to who can sell a financial product — it doesn't say a senior cannot buy a financial product with proceeds. A firewall is one barrier. Josh from the company clearly points out that they're aware of it and two separate parties will help these folks.

    • Permit us to be skeptical. All we see is the top of the iceberg. If this is a way to finance LTC, not insurance, and it will not harm Medicaid qualification, then explain it. I don't like black-box concepts. And, yes, I have sold LTCI and own a policy. I have seen too many faulty Chinese walls, (think the need for Glass-Steagall), that don't work. Snoopy's may work, but I'm not sure this one would.

    • beaches21,

      I did what the Critic suggested and went to their website. See if you find that they describe themselves as a facilitator of self-funded LTC.

      I really do not believe you are so naive as to believe that the only thing those proceeds will be used for is self-funded LTC. What is the matter with using HECM proceeds to purchase LTCi from this company if it is the right product for the senior?

      Why did this company start this subsidiary? You mean the proceeds from HECMs that other companies provide cannot be used to fund LTC? Please….

      I am not just skeptical….

  • Most would agree that no one should take out a reverse mortgage in order to gamble with the money. Long Term Care Insurance is a gamble, and the odds of “winning” aren’t great. In order to “pay off”, a senior would have to stay in a nursing home for an amount of time that would exceeded the costs of the insurance premiums they had paid over the lifetime of the LTCi policy. Add to that, the cost of a reverse mortgage loan. Example of a “winner”: A senior who stays in a nursing home for more than one year. What are the odds of that happening? According to most reliable government sources [data available from both the U.S. Department of Health Services – Centers for Disease Control and Prevention Vital and Health statistics California’s Office of Statewide Health Planning and Development (OSHPD)], approximately 40% – 45% of seniors will go into a nursing home at some stage of their life. Of those who go into a nursing home, within ninety day, 70% will be discharged (go home, go to an assisted living facility, or die). At 120 days, 80% will be discharged. One year? Less than 12% of those going into the facility will be there for one year of more. So, of all seniors, less then half will go into a facility and less than 12% of that group will be there for one year. Equals what, 4 – 6%? A senior should think long and hard before they use very expensive money (the reverse mortgage loan) to finance a long-term care insurance policy. A weak bet at best. Seniors who have homes and like to gamble should forget about long-term care insurance and run the risk of going into a nursing home for more than one year. It’s a smarter bet. And as for the argument of having LTCi for “protecting” the estate? The senior loses the house anyway if they remain in the nursing home for more than12 months (the RM comes due). “Win” or “lose” or “draw”, the RM loan is a very expensive way to finance a bet.

    • Prescott,

      There are now LTCi policies that give back premiums as life insurance to the extent not used in providing LTC. They are interesting and if properly selected are less expensive than far less generous ones. The bet for the senior is lost interest and fees on the reverse mortgage. For some the risk is worth it but certainly not all.

  • Your erroneous remarks are off topic. I don't know what your area expertise is, but I would suggest you stick to it.
    How many times does it take for you to realize that this outfit does not want to sell LTC insurance. So why belabor that point with your remarks on LTCI and your lack of knowledge about it.

  • Good comments. Of course, I could argue that car insurance isn't a good deal if you don't have an accident, property insurance an expensive mistake if your house isn't blown away or catches fire.
    This company is starting a subsidiary, from what I understand, to help folks who do NOT qualify for LTCi. Can't GET LTCi insurance. These folks self insure, geting a reverse mortgage to have the money to STAY IN THEIR HOME, not a nursing home. Without the money to pay for that care, they will go straight to a nursing home.
    My mission in life is not to argue with folks who don't think money from a reverse mortgage should be used for anything other than monthly income or to eliminate a mortgage payment. There are hundreds of uses for proceeds, depending on what the folks think is best for them. And not every company offering an alternative is a crook. Thanks for listening (reading).

  • If you go on their site – LTC Financial Partners (LTCFP), you will see how you'll be connected with one of their insurance agent partners. Just put in your zip code and up pops several insurance salespersons – some are selling annuities as well as long term care insurance. It looks like LTCF is a lead generating enterprise for insurance agents.

    • It looks like LTCF is a lead generating enterprise for insurance agents.

      So what does that have to do with self-funding for HCR (not insurance)?
      I am not that obtuse, and no one has responded on how this will be done.
      And beaches, you should want to know the details, since if it disqualifies someone for Medicaid, I would hope a RM originator involved in this “strategy” has E&O insurance or all his assets in Kazakhstan or somewhere well hidden from the plaintiff's lawyers.

  • Whether or not it is worthwhile to take out a reverse mortgage in order to create a long term care fund would depend on how much interest the fund could generate and if it would offset the high cost (and continual compounding) of the reveres mortgage.
    Medicaid and Reverse Mortgages – Check your state – In California, if someone is on Medicaid and transfers their interest (gets their name off of the property) before they pass away, there is no Medicaid recovery – the home is not subject to any Medicaid recovery. Things become more complicated (and expensive) when the Medicaid recipient has a reverse mortgage. In order to avoid a Medicaid recovery the individual would have to pay off the reverse mortgage loan before he or she would transfer his or her property interest to someone else. This is exceedingly difficult to execute when someone is in a nursing home with limited or no mental capacity. Even when possible, there is the added layers of legal expense in order to change the property title.

    • So you are a Elder Care attorney/Medicaid expert with knowledge of securities (the interest and compounding you refer to might be considered a security, depending on how the plan is structured).
      Sorry, this is all BS, without details.

  • Sorry, I though the LTC self-funding thing was nothing more than pulling money out the home then parking it a bank account. Are they recommending pooling the money with investors?

    • Mr. Cole,

      Maybe you could have someone look into this matter? Incurring accrued interest in a very complicated scheme that could easily result in loss just does not smell right. I hope the owners will provide some information on their approach.

      If the vehicle is a VEBA, why don't they just say so? These black boxes are worrisome. It may be the best thing ever, but transparency would help….

  • LTC is 400+ insurance agents supplying “leads” to Reverse Mortgage Direct(RMD). Do you really think RMD cares what they use the proceeds for? Selling Reverse Mortgages is very profitable. The business model for RMD sounds very “cost effective,” with lead generators that get $100.00 if the loan “Closes.”

  • LTC is 400+ insurance agents supplying “leads” to Reverse Mortgage Direct(RMD). Do you really think RMD cares what they use the proceeds for? Selling Reverse Mortgages is very profitable. The business model for RMD sounds very “cost effective,” with lead generators that get $100.00 if the loan “Closes.”

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