National Accounting Journal: Best Time for Reverse Mortgages May Be Now

Reverse mortgages have in the past been looked upon as a last resort by many CPAs and financial advisors, but recent changes to the loan options available are making them more attractive, writes the Journal of Accountancy in an article published this week. 

The journal is the flagship publication for the American Institute of Certified Public Accountants, a member-organization that reaches a membership of more than 350,000.

Taking an in-depth look at reverse mortgage products today, including rules, fees, private and family options as well as alternatives such as home equity lines of credit, the article explains to accountants how the loan programs can work for their clients. 

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In conclusion the Journal of Accountancy writes

Reverse mortgages may be used for a variety of purposes, including saving a home from foreclosure, supplementing pensions and Social Security benefits, meeting current or future medical expenses, or just maintaining a comfortable lifestyle. Practitioners should be prepared to discuss the advantages, disadvantages, and alternatives to ensure that their clients make a well-informed decision.

The best time to take out a reverse mortgage may be now, as interest rates are at all-time lows. Currently, adjustable-rate HECMs are available for around 3%, while fixed-rate HECMs are around 5%. A CPA’s or financial adviser’s input into the investment decision may be crucial.

Read the original article at the Journal of Accountancy.

Written by Elizabeth Ecker

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  • Not all CPAs are members of the AICPA even though we all passed its CPA exam.  And certainly the AICPA only represents a small percentage of “accountants,” bookkeepers, tax professionals, accounts receivable and payable personnel, and so many others all contributing in one fashion or another to providing accounting, tax, and consulting information to hundreds of thousands of employers and clients each month, quarter, and year.

    A considerable percentage of CFPs are also CPAs and have gone beyond both to hold the highly respected PFS designation.  The Journal of Accountancy is not the most technical or practical of the many AICPA publications but it is certainly an industry standard and its flagship.

    To gain such recognition in the Journal of Accountancy is another positive milestone for our industry.

    So the question remains and haunts deeper.  When will all of this positive exposure and recognition by both the Journal of Accountancy and the Journal of Financial Planning be reflected in our endorsement numbers?  And does all of this recognition not clearly speak for the need of a more financially educated sales force (no not just “educators”) to meet with CPAs, CFPs, CFAs, and other financial professionals to gain more endorsements from the clients and other spheres of influence these professionals impact everyday.  If every current member of the AICPA only averaged two recommendations in their entire careers, our total industry endorsements throughout its history would be almost doubled.

    What damage does it do to the industry to send out originators to such professionals to have the reverse mortgage originators themselves question why Savers?  If you are an executive in this industry and have not seen this phenomenon, then perhaps it is time to learn about what will be needed to reap real results from these new recommendations.  In 2004, I personally spent months looking for an originator who really knew much in financial terms about our products.  Most could tell me myths about equity conversion, “tax-free” income, how nonrecourse was due to FHA MIP, and on and on, but only a very few could describe the products as the mortgages they are.  It was because of one MBA in particular, I did not throw up my hands and walk away from the industry in total disgust.  This one MBA not only gained one of my long time friends as a client but the MBA and I are still close friends to this day.   

    Will we move quickly to reap the fruit from these recommendations before they spoil?  Time is of the essence.

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