The reverse mortgage industry is constantly trying to educate potential borrowers on the benefits of the product using late night TV ads with famous celebrities. But there are far more companies who are on the smaller side in communities all over the country who are bringing a real respectability to the industry without all of the bells and whistles, according to a recent article in the New York Times.
Two community banks in the Pittsburgh area originate reverse mortgages and have been doing so for years, but their focus is not on commission and numbers, it’s on bringing in clients and building meaningful relationships for years to come. Each bank originates about 100 reverse mortgages a year, but their caution appears purposeful, the article writes.
All of the loan officers at each of the banks are on salary. “You don’t have an environment where people have to get the loan closed or they won’t be able to pay their mortgage next month,” Mike Henry, senior vice president for residential lending at Dollar Bank, located in Pittsburgh, was quoted saying in the article.
Another aspect that one of the banks focuses on is advising potential borrowers to come in for a meeting with family members or another trusted advisor.
“Many reverse mortgage borrowers are in their 70s or 80s, and some of them may be in the beginning stages of cognitive decline,” the article writes. “If I were a banker, I would want adult children in the room so they knew that their parent had willingly signed up — and so those same children won’t be blindsided by the debt later.”
Another reason these banks do this is to try and prevent some adult children from taking advantage of the reverse mortgage funds or pressuring their parents into applying in the first place. “Customer-facing employees undergo training in recognizing elder abuse,” the article says.
There are no hard and fast rules for reverse mortgages, the article explains, but they can be a huge help for the right person in the right situation, at the right time.
Read the full article from the New York Times
Written by Alana Stramowski