Following the launch of a reverse mortgage rebranding effort, local news outlets are taking note of the “new” reverse mortgage in their coverage.
A recent The Denver Post Business article discusses the new “retire smart” campaign, noting that Denver is one of three markets, along with Philadelphia and Seattle, where the National Reverse Mortgage Lenders Association is testing the new marketing approach.
“Reverse mortgages have long carried a survival-tinged message — use your home to stay at home,” Denver Post writes. “Tougher underwriting standards from the U.S. Department of Housing and Urban Development have made it more difficult for the most desperate to get a reverse mortgage.”
Many borrowers turned to reverse mortgage during the financial downturn as a way to meet basic living expenses, but some were so strapped they couldn’t pay insurance and property taxes and lost their homes.
Those defaults, which coincided with a sharp drop in home values, not only took a toll on the Federal Housing Administration’s reputation, but also its finances.
“The response was to ratchet down on underwriting, limit lump sum withdrawals, and better protect consumers and the lending program,” Denver Post writes.
After peaking at around 114,000 in 2007, reverse mortgage volumes are running closer to 60,000.
“It is now being pushed very heavily to financial planners and CPAs as a financial planing tool,” Jim Spray, an independent mortgage broker in Arvada who specializes in reverse mortgages, tells Denver Post.
Some financial planners advise retirees to take out reverse mortgages as standby credit lines, which can allow retirees to keep more of their money in higher-returning investments like stocks rather than low-yielding and safe alternatives like certificates of deposits, the Denver Post writes, adding that only applies to those with with retirement assets.
Of baby boomers who have saved, the average amount is only $125,000.
“We have this looming crisis,” National Reverse Mortgage Lenders Association President Peter Bell tells Denver Post.
Read the full article “Denver a test market for reverse mortgage rebranding” here.
Written by Cassandra Dowell