CBS MoneyWatch: Reverse Mortgages May Be Set to Boom

Nothing is ever all bad or all good, says CBS MoneyWatch in a recent segment, and the same is true for reverse mortgages, the news outlet finds in an interview with a real estate attorney. But the loans may be increasing in popularity in the coming months and years.

Neither fully positive nor fully negative on reverse mortgage loans, real estate attorney Benjamin Weinstock tells CBS news in a video segment and written article about reverse mortgage benefits and shortcomings from his standpoint.

Pros noted by Weinstock are the ease by which borrowers can qualify; namely those who do not have substantial income or stellar credit to qualify. On the flip side, he says, the loans can be more expensive than conventional loans and “can result in disinheritance” of the home’s heirs.

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The segment fails to discuss the process by which reverse mortgage heirs can inherit the repayment of the reverse mortgage and can complete that repayment however they so choose.

“But reverse mortgages may be ready for their own reversal of fortune,” CBS writes. “Recent government regulations have strengthened them and baby boomers are looking for additional sources of income to fund their retirements, financial experts say.”

CBS speaks with Bankrate Chief Financial Analyst Greg McBride who tells the publication he sees reverse mortgages as a major lifeline for many Americans.

“The reverse mortgage is going to be a lifeline for millions of retirees in the years to come,” Greg McBride told CBS MoneyWatch. “In large part that’s because people may not have enough saved in their 401(k) plans or IRAs, and the bulk of their wealth may be tied up in the equity in their home. The reverse mortgage becomes the avenue to access those funds.”

CBS also speaks with Alicia Munnell of the Boston College Center for Retirement Research who advises that if borrowers don’t plan to remain in their homes for at least 10 years, the reverse mortgage may not be the best option. Otherwise, she tells CBS, she is a fan.

View the full article and video segment.

Written by Elizabeth Ecker

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  • Elizabeth,

    Per his firm profile, “Mr. Benjamin Weinstock is a partner at Ruskin Moscou Faltischek, where he is co-chair of the firm’s Real Estate Department.” In the interview the interviewer called him a real estate attorney, not an estate attorney.

  • Desperation yields strange bedfellows.

    Now if a self described fan who is also an investor in a lender like Longbridge is advocating only getting a HECM if the prospect has decided to live in the collateral for 10 years, how long are anti-fans of HECMs saying that the minimum time should be, 10 years and 1 day?,

    Oh, yeah, then it seems Dr. Munnell has also discovered the real problem with HECMs in saying: “…pay property taxes and the premiums for homeowner’s insurance,” she said. “If you don’t, it’s technically in default and the bank can foreclose.”

    But wouldn’t you know a killjoy, Bankrate chief financial analyst Greg McBride, just had to step in and ruin this moment of great insight about HECMs by saying: “‘If you don’t pay your property taxes, you will get foreclosed upon regardless’ of the kind of mortgage you have…” Greg, you can really ruin the moment (but thanks for doing it).

    NRMLA is doing a great job of gathering just the right academics to help spread the word and drive home the point that HECMs are a viable and responsible financial retirement product. The industry needs more academics like Ms. Munnell speaking out in support of HECMs (but are we really that desperate?).

  • From a logical point of view I agree, we should be in for a BOOM in the reverse mortgage market. Just the pure numbers of seniors coming eligible due to age puts the law of averages on our side.

    However, what we must not do is get caught in the trap of seeing the $ opportunities and forget one of the main reasons we are in the business in the first place, our seniors.

    Our seniors will be more vulnerable than ever in this changing market. They are susceptible more scam operators taking advantage of them. To many people may be getting into our industry for the wrong reasons and that can spell disaster.

    It is the responsibility of the industry leaders, NRMLA and other organizations coming into view that care about the future of the RM industry and the senior.

    Industry leaders can be choosy on those they employ, they can have rigid training programs in place and make sure their employees have the proper knowledge to to guide our seniors the right way with their interest at heart as the primary goal!

    John A. Smaldone

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