Reverse Mortgage: Last Option or Best Hope?

As the reverse mortgage industry draws near to new program changes taking effect in 2015, it’s time to stop thinking about the product as a penalty or a last resort, and start thinking about it as a retirement tool.

Such is the advice of ThinkAdvisor, an online resource for investment news, in-depth analysis and market data and tools. 

Although the financial product has received a bad reputation over the years, new regulations will inspire a lot more conversations among financial planners and their clients about this alternative revenue option, which many say has its place in retirement planning. 


“Despite their largely negative public image, many mortgage loan originators say reverse mortgages can represent a legitimate retirement ‘tool’ that enables an individual or couple to stay in their home and maintain a desired lifestyle,” David Weldon writes. 

Mario Quintero, a mortgage loan originator with Strock & Tanner Mortgage Corporation, which serves Florida and New Jersey, has experienced this firsthand, having helped save 25 families from foreclosure by using a reverse mortgage. 

Additionally, Quintero notes that some clients seek reverse mortgages to have access to disposable liquid cash, while others are using a reverse mortgage to purchase a new home in retirement. 

And, contrary to what some might think, consumers are becoming more educated about the product.  

“I would say that about 95 percent of them have already done extensive research on the product,” Quintero told ThinkAdvisor. “There’s about 5 percent that still have to be coached through the process.”

To read the full article, click here

Written by Emily Study

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  • Interestingly, the author shares: “But that is about to change for many, as new regulations go into effect in 2015 that will require individuals that opt for a reverse mortgage to have financial planner counseling.”

    Ignorance about HECMs is not only found among our detractors but even those who find favor in HECMs. It seems by the quote above, David knows a lot about this product that few of us are aware of. Starting on what date will financial planner counseling be required? That is most likely found in Mortgagee Letter 2014-96442 (Hint: There is no such Mortgagee Letter).

    It seems there is no end to ignorant experts: “’The second concerns changes in the guidelines for reverse mortgages that HUD has imposed over the past year which reduces the amount of funds that a couple or individual can qualify for. They’re a little upset at the changes …. Because of the irresponsibility of other borrowers in the past that failed to keep their end of the bargain on paying taxes and insurance, and they feel today that they’re paying for those mistakes,’ Quintero said.”

    The changes last year, which I assume are those which took place on both September 30, 2013 and August 4, 2014 had little to do with property charge defaults as Quintero claims but rather estimated termination losses due to other maturity events. The main risk the MMI Fund faces are from terminating fixed rate Standards in the future. It seems Quintero does not understand that the purpose of financial assessment is to reduce property charge defaults which are mainly the concern of lenders/servicers not so much FHA.

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