Financial Planning Publication Shows Turnaround View on Reverse Mortgage Use

Online publication Registered Rep touted the use of reverse mortgages in retirement in a column published this week. 

The publication, which serves investment advisors and other financial planning professionals, states in a column by Mark Miller that while reverse mortgages were not always considered a viable retirement option, they are worth considering today. 

While downsizing is the best way to tap home equity, the article, titled “Five Ways to Change Your Clients’ Retirement Math,” states, reverse mortgages offer a second option “—with caveats.” 

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“I’m not a fan of adding debt in retirement, and traditional reverse loans carry heavy fees. But a relatively new lower-cost option introduced last year could make sense in some cases,” Miller writes. “The Saver HECM (Home Equity Conversion Mortgage) is administered by the federal government, just like a standard reverse loan. But the amount that can be borrowed is smaller, and Saver HECMs can be used as a flexible line of credit. Saver HECMs also have far lower costs: an upfront premium of only 0.01% of the property’s value, or HUD’s loan limit, whichever is less, versus the standard loan’s 2%.

The article cites recent the views of some planning experts, including Harold Evensky of Evensky & Katz Wealth Management as seeing reverse mortgages as a way for some clients with short-term cash shortfalls to avoid selling other investments in the interim. Others have suggested using the HECM Saver as a way to delay filing early for Social Security, the article says. 

Read the original article.  

Written by Elizabeth Ecker

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  • Jamie Dimon was right about managing risk.  A $100 Billion risk was probably over the top for the Chase group making the investment; however, it is not as unreasonable as most seniors using reverse mortgage proceeds to delay Social Security to obtain higher benefits later.  That risk in most cases is far, far worse proportionately for the senior than the $100 Billion risk Chase took.  The loss and remaining contingent loss are no more than a rounding error at Chase but the same cannot be said about the delay strategy being promoted by some in our industry for most seniors.

  • Great to see someone who has been openly critical of the industry/product in the past like this journalist acknowledging progress that is being made in offering HECM Saver to address the more mainstream consumer needs.

    • Mr. Lunde,

      Interesting observation.  
      Mr. Mark Miller did not seem all that negative about reverse mortgages in the past.  He seemed more like a reporter than someone expressing a negative view on the products.  Although there times, it seemed some of his reporting was taken from some very deeply biased sources.

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