CBS News: Reverse Mortgages Work If You’re Hell Bent on Staying at Home

CBS News’ “Jill on Money” featured a recent podcast segment presenting Jill Schlesinger’s take on reverse mortgages in response to a question from a listener whose mother is considering one of the loans.

While she says they can be expensive, Schlesinger notes that reverse mortgages can be a viable option for seniors who are “hell bent” on staying in their homes.

Reverse mortgages are good, she says, for those who are on a fixed income and whose home is their biggest asset. “The younger you are, the less effective a reverse mortgage is,” she says, noting that the amount that can be borrowed depends on age and appraised value.

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[Listen to the podcast starting at Minute 23:00]

While Schlesinger warns that costs can be steep and that alternatives should also be considered, she ultimately advises the listener that the reverse mortgage may be an option, and that he should attend meetings regarding the mortgage with his mother.

Visit the show on CBS Money Watch.

Written by Elizabeth Ecker

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  • Jill is a little confused.  She separates borrowing against the house from reverse mortgages.  We need to ask ourselves — how did she reach that conclusion? 

    Jill makes reverse mortgages sound like something akin to a sale leaseback where the lease payments are offset inside of the transaction so that there are no “lease” type payments payable and the heirs do not get the home.  It definitely does not sound like a mortgage.  In that distorted context it kind of makes sense; the older the senior the lower the offset so the greater the money to older seniors.  The mystical and elusive “equity release” and “equity conversion” concepts (whatever they are) seemed to have helped make everything just that much muddier.

    I am sure Jill believes she knows enough about reverse mortgages to be a strong advisor on the subject but for the few of us who are active in this industry including HUD employees, NRMLA employees, law firm legal staff specializing in reverse mortgages, counselors, originations, and other reverse mortgage lender staff, it is obvious Jill is a very loose cannon on the subject.

    How hard will it be to help Jill through her misconceptions?  Will she ever see this mortgage as the nonrecourse mortgage it is?  To this day everyone I have heard try to define equity release and equity conversion, end up saying things that do not end with “nonrecourse mortgage with a deferred payment option.”  Why?  Like Jill it seems reverse mortgages are not borrowing against the home but that new fourth category even Jill cannot fully describe accurately. 

    Yet marketers have spent years dreaming up ways to get around calling a mortgage, a mortgage.  Why?  Is it really for the noble purpose of educating seniors about the product?  Please forgive my doubts.

  • Jill is a little confused.  She separates borrowing against the house from reverse mortgages.  We need to ask ourselves — how did she reach that conclusion? 

    Jill makes reverse mortgages sound like something akin to a sale leaseback where the lease payments are offset inside of the transaction so that there are no “lease” type payments payable and the heirs do not get the home.  It definitely does not sound like a mortgage.  In that distorted context it kind of makes sense; the older the senior the lower the offset so the greater the money to older seniors.  The mystical and elusive “equity release” and “equity conversion” concepts (whatever they are) seemed to have helped make everything just that much muddier.

    I am sure Jill believes she knows enough about reverse mortgages to be a strong advisor on the subject but for the few of us who are active in this industry including HUD employees, NRMLA employees, law firm legal staff specializing in reverse mortgages, counselors, originations, and other reverse mortgage lender staff, it is obvious Jill is a very loose cannon on the subject.

    How hard will it be to help Jill through her misconceptions?  Will she ever see this mortgage as the nonrecourse mortgage it is?  To this day everyone I have heard try to define equity release and equity conversion, end up saying things that do not end with “nonrecourse mortgage with a deferred payment option.”  Why?  Like Jill it seems reverse mortgages are not borrowing against the home but that new fourth category even Jill cannot fully describe accurately. 

    Yet marketers have spent years dreaming up ways to get around calling a mortgage, a mortgage.  Why?  Is it really for the noble purpose of educating seniors about the product?  Please forgive my doubts.

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