Fox News: Reverse Mortgages Require Smart Consumers

When it comes to reverse mortgages, be a smart consumer, writes Fox News contributor Robert Massi in a column this week.

Massi, who has covered reverse mortgages for Fox News in the past, presents major considerations for taking out a reverse mortgage, including references to recent updates such as the financial assessment and non-borrowing spouse protections that have recently been implemented.

“A reverse mortgage is basically a tax-free advance on your home equity,” Massi writes. “For some people, a reverse mortgage can offer financial freedom to enjoy their later years without worrying about income. For others, it can provide much needed help for staying in their homes. The money from a reverse mortgage can be used to provide help in meeting medical or caregiving expenses, or to help defray tax payments or home maintenance costs.”

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However, he cautions, there are a few red flags to look out for, as well as details all prospective borrowers should attend to. Those include fees and other costs, and consideration for any spouse or heirs who may either live in the home, or inherit it in the case of the borrower’s passing away.

“You are borrowing against the equity in your home, which means that when it is sold and the reverse mortgage is repaid, there may be very little profit to disburse through your estate,” he writes.

Ultimately, he says, the loan options offer their share of benefits, but interested consumers should shop around, beware of hard sells and potential cross-selling conflicts, and understand the total loan costs and repayment structures.

“Compare fees and costs,” Massi says. “Shop around and make sure you are getting the kind of loan that is right for your situation.”

View the Fox News article.

Written by Elizabeth Ecker

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  • If there is a need for the consumer to be smart, what about the originator? Since February 2013 as the end of fixed rate Standards drew near, it looked more and more like to increase endorsements, there would be a need to reach out to a less needs based senior population, one that was more familiar with the financial markets and loan terms. One that is more likely to seek the advice of a financial adviser or a tax accountant.

    Come forward two years and you have the capacity test for the credit underwrite of HECMs. More than ever having a customer who is well disciplined and diligent in their approach to finance and debt means fewer LESAs and fewer declines.

    So who is more adept in this environment, someone who has had little responsibility for finances at home or work and little exposure to solid financial education? There will always be a need for people who care about seniors and their financial future. Yet to grow this market we need to go beyond our prior minimum requirements. Endorsements do not grow on trees or expand through our education techniques.

    To grow we will need more financially astute and formally educated originators with the desire to help seniors have the cash they need throughout retirement.

  • Bob Massi always amazes me. He acts like he has all the answers for Fox news on every financial issue, even reverse mortgages.

    I like the way he warns spouses and others who live in the home in the home if the borrowers pass away. What does he think the spouse is? Maybe he is referring to a spouse that becomes present after the HECM is taken out, I don’t know.

    I wonder if he heard about the NBS ruling? I also wonder if he knows what true passionate reverse mortgage loan officers know? What I am referring to is that the equity in seniors who take out a reverse mortgage usually is to try and improve their quality of life, not being concerned how much profit, as Massi puts it, I like to say how much equity is left to disburse to the heirs!

    If the senior is more concerned how much they are going to leave their children than their quality of life, a reverse mortgage may not be for them. We that are in the industry must respect our seniors wishes, especially if they are emphatic about it.

    Bob Massi said some good things on Fox but he lacks the knowledge. Many of you may remember years ago that I challenged Fox News and Massi to a debate on reverse mortgages after he blasted the HECM on national TV unjustifiably. They turned me down!

    John A. Smaldone

    • John,

      It seems Bob has throttled down his former rhetoric against HECMs way down. I just saw a video segment where Bob interviewed two couples who got their HECMs through Josh Shein. Fox News aired the segment last week as his Property Man segment. It was very positive. See

      http://video.foxnews.com/v/4438869666001/how-to-have-a-reverse-mortgage-success-story/?#sp=show-clips

      There are three active Mortgagee Letters (MLs) dealing with the non-borrowing spouses. For new applicants, ML 2015-02 is the relevant ML. The problem with that ML is that it is far more severe toward non-borrowing spouses (NBSs) than either the law or policy towards a spouse who is a borrower. Yes, NBSs should be cut off from taking loan proceeds but why is there a need for them to live in the home as their principal residence throughout the period that the HECM is active? Co-borrowing do not have that restriction as long as there is no time in which a borrower does not live in the home as that borrower’s principal residence (meaning lives there six months plus one day out of any 12 month period). Also there is no protection from displacement if the borrowing spouse has to move out for more than a year because of health reasons.

      So I agree with Bob, NBSs beware you could unwittingly lose your right to live in the home beyond the life of your borrowing spouse due to situations beyond your control such as you or your borrowing spouse needing to be out of the home for more than a year due to physical or mental health issues. There is no allowance in the ML for a NBS to cure any defaults.

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