Realtor Weighs Reverse Mortgage Pros, Cons on NBC News

Several prominent financial planners, researchers and academicians have touted the benefits of reverse mortgages in a variety of consumer-facing media outlets, while other professionals such as Realtors have been less outspoken on the product, that is, until a recent NBC News segment this week.

In a real estate segment featured on Arizona’s Channel 12 NBC News, Holly Henbest, a Realtor with The Henbest Team in Scottsdale, Ariz., discussed what consumers need to know about reverse mortgages, and how these loans can be an effective solution for retirees planing to age in place and increase cash flow.

“They [reverse mortgages] are starting to gain a little bit more notice or popularity, if you will, because we’ve seen the equity in homes start to rise over the last year with prices going up,” Henbest said. “If you’re over the age of 62 and you have equity, or have paid off your home and your’e looking for a way to sustain your livelihood with additional income, this can be a great avenue to take.”

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Although the segment repeatedly refers to loan proceeds as “income,” for the most part, the overall tone of the piece conveys a positive message for reverse mortgages.

“Every situation is different,” Henbest said. “This isn’t going to be the best loan for everybody, but depending on your situation, if you want to stay in your home, you’re over the age of 62, you have equity—this [reverse mortgage] could be a way to do it.”

Surprisingly enough, Henbest did not mention using a reverse mortgage to purchase a home. See what other reverse mortgage talking points were discussed in the NBC News segment.

Written by Jason Oliva

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  • When Holly was asked how much money a borrower could get, she answered that the borrower would get up to the appraised value of the home to a maximum of around $625,000. From that moment on, it was obvious that this Realtor does not grasp the most basic principles issues regarding HECMs, in particular.

    Her example of a home worth $500K with a mortgage of $200K and still get $300K from the HECM demonstrates that her previous statement was not camera anxiety but rather a flawed understanding of HECMs. Further in discussing how the $300K can be paid out, she completely ignores the first year disbursement limitation.

    It is interesting how many people believe there were no qualifications at all for HECMs in the past. While income may not have been a qualification, property and to a minimum degree so was character.

    What was interesting is how Holly ended it with a remark that it is not easy make any decision on a home loan. At least she equates reverse mortgages as a home loan.

    While this may have been a positive news segment for some odd type of reverse mortgage I am unacquainted with, it had little to do with a HECM.

  • I have a question. I have been in the mortgage industry for 22 years but I have originated reverse mortgages exclusively since 2007. It seems like over the last few years, many articles are touting working with financial planners. I do get how beneficial it is to work with financial planners if you originate reverse mortgages. But has anyone ever cared to research exactly what percentage of senior homeowners actually have sufficient assets to warrant having a financial planner? I mean really? After originating loans for only seniors for 8 years, I find that the vast majority of them (like 75%) didn’t earn enough income during their working years to save enough to even need a financial planner. Most of them don’t need a financial planner because they have no assets to plan. But many do own a home with enough equity to qualify for a reverse mortgage. And it is a known fact that home equity represents the bulk of the wealth held by a large percentage of seniors. Those individuals, you know “the majority”, are seniors who are truly helped by the reverse mortgage. I know because I’ve personally originated many. So why aren’t they the primary target for education about our product? Why not educate the 75% who really need the product as opposed to the 15% who really doesn’t need it? I mean, I get the whole financial planning, using loan proceeds as monthly income or to postpone SSI until 65, line of credit grows and is security thing…. But its like our industry is ashamed to admit that the vast majority of seniors are struggling financially and need help, even though its true? Could someone please explain this to me? I bet whoever the webmaster is doesn’t even post this comment…I guess we will see….

    • Mr. V.,

      As we all know it is great when you have a referral source who understands the value of your product with customers (or clients) who meet a general profile that will benefit from getting your product. So rather than going out and making many people familiar with the intricacies of reverse mortgages, if you can do that with a few and still have the volume you would with the many, why not do so?

      If only 10% of the seniors who would find benefit from having a reverse mortgage are served by financial planners, again it would seem that there are cost and time savings if the originator focused on financial advisors. If our industry were able to provide even 10% of that 10% with HECMs, our endorsement level would rise by nearly 50%.

      Now the question is what kind of financial adviser do you want to affiliate with, those who lack independence, have no fiduciary responsibility (legally or by recognized credential), or who are known for their incompetence? Not every financial adviser brings the same professional depth of experience, level of care, competence, formal education, or breadth of education or experience to the market. Many financial and insurance product salespeople call themselves financial advisers when in fact all they have is a qualifying registration or license to sell their products with little formal education even on the products they offer.

      For most of us having a warm referral from a well established financial planner with requisite credentials makes the experience so much pleasant for both the borrower and ourselves. This is why we need a breakthrough as financial advisors. Now come will state we have that but our endorsements do not reflect such a breakthrough.

      As to your 75%, there is absolute nothing wrong in trying to seek them out and let them enjoy the benefits of a HECM but will they be as capable of doing that without a knowledgeable, competent, fiduciary responsible, and talented financial adviser providing cash flow planning assistance and advice.

  • What was the Realtor presenting anyway? It certainly had little to do with HECMs.

    While you had to hand it to the Realtor for trying, it certainly was no presentation of the pros and cons on HECMs. It really was not about HECMs.

    So forget about her confusion of income versus cash flow, the Realtor needs someone to contact her about HECMs are and then H4Ps.

  • And the Newscast showing those wonderful youthful 62+ people signing documents at the closing table. This is why Consumers are confused on what is fact and what is marketing.

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