Business Insider: For Reverse Mortgages, It All Depends on Where You Live

“It all depends on where you live,” writes a Business Insider report published this week, in coverage of reverse mortgage products following the exit of Wells Fargo from the business.

The Wells Fargo exit, the article notes, comes following Bank of America’s exit earlier this year, but does not say anything about the availability of the product.

“Does that mean reverse mortgages are a bad deal for seniors? Does it mean such loans will no longer be available?” the article asks. “Absolutely not,” a mortgage industry consultant tells the publication.

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Reverse mortgages make more sense in markets that have not been impacted as much by the decline in home values, the consultant advises, versus areas that have lost as much as 40% in home values. In those hard-hit areas, he tells Business Insider, the decision “makes absolutely no sense.”

The business has become too risky for some large banks, the article says, with some seniors not having met the tax and insurance payments on the loans.

But, National Reverse Mortgage Lenders Association President and CEO Peter Bell tells the publication, reverse mortgages still make sense for some people.

“For a senior that is cash-constrained and finding it difficult to make ends meet on a day-to-day basis, and if they have a mortgage that’s sucking up a lot of their income, they can use the reverse mortgage to get cash now, or to pay off their mortgage,” he said.

Read the Business Insider article.

Written by Elizabeth Ecker

 

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  • What does Mr. Wakefield mean when he states the following?  “‘To make a reverse mortgage in a market where the values are in question makes absolutely no sense,’ says Wakefield, who points out that some cities have watched their home values drop by as much as 40%. ‘Where reverse lending makes a lot of sense is in markets that have not been impacted as much by the decline in home values.’”
     
    While the quote is more understandable if the issue is about a lender setting up a headquarters in such states, it makes little sense regarding just getting a reverse mortgage.  The issues are always the same no matter what the lost home value was from four years ago.
    Then the writer goes on to say:  “….they allow people over age 62 with lots of equity in their homes to get money in exchange for their home….”  In exchange for what??? 
     
    The writer goes on further saying:  “…the lender gets ownership of the house when the borrower dies or moves.”
     
    We have a long way to go in educating writers even if they do speak with Peter Bell.

  • What does Mr. Wakefield mean when he states the following?  “‘To make a reverse mortgage in a market where the values are in question makes absolutely no sense,’ says Wakefield, who points out that some cities have watched their home values drop by as much as 40%. ‘Where reverse lending makes a lot of sense is in markets that have not been impacted as much by the decline in home values.’”
     
    While the quote is more understandable if the issue is about a lender setting up a headquarters in such states, it makes little sense regarding just getting a reverse mortgage.  The issues are always the same no matter what the lost home value was from four years ago.
    Then the writer goes on to say:  “….they allow people over age 62 with lots of equity in their homes to get money in exchange for their home….”  In exchange for what??? 
     
    The writer goes on further saying:  “…the lender gets ownership of the house when the borrower dies or moves.”
     
    We have a long way to go in educating writers even if they do speak with Peter Bell.

  • Again another article with the big misconception that the lender gets the home whena senior does a Reverse Mortgage. Do these people do any research?

  • Again another article with the big misconception that the lender gets the home whena senior does a Reverse Mortgage. Do these people do any research?

  • You can still originate reverse mortgages for senior homeowners underwater. There called short payoff reverse mortgages. I fail to understand why NARMLA has not seized on this for promotional purposes. Saving grandma and grandpas’ home from foreclosure is very powerful PR and would put the industry in a more positive light.
     

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