MarketWatch: Is the Tide Turning for Reverse Mortgages?

To anyone who has worked in this industry for some time, the reputation challenges of reverse mortgages may come as no surprise. But while the growing acceptance of reverse mortgages has largely nodded to newer program changes enacted over the last few years, more recent developments in the past week signal a turning of the tides for reverse mortgages, according to a recent MarketWatch article.

Since the implementation of the Financial Assessment and new non-borrowing spouse policies, reverse mortgages have garnered arguably the most positive press they have ever seen. The advent of these new updates also caught the attention of the financial planning community, which has in turn produced a bevy of research and articles on how reverse mortgages can be effectively incorporated into a retirement planning strategy.

Last week, the New York Times published an article on how community banks are bringing a “Main Street respectability” to the reverse mortgage product.

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The article highlighted two community bankers serving the Pennsylvania area who began offering reverse mortgages during a time when other lenders were shying away from the product. An emphasis for both companies was the importance of actively engaging prospective borrowers and their family members to ensure everyone involved understands the product.

“The customers who end up taking out the loan appear to be pleased with the product,” writes Alicia Munnell, director of the Center for Retirement Research at Boston College, in the MarketWatch column. “And the fact that community bankers are offering reverse mortgages is lending respectability to this ‘much-maligned’ but increasingly necessary product.”

Just how necessary reverse mortgages will become for many American retirees was further detailed in a report released last week by the Bipartisan Policy Center’s Commission on Retirement Security and Personal Savings.

In its 152-page report, the Commission outlined several policy issues targeted at improving the resources available to help millions of low- and middle-income Americans sufficiently prepare for their financial future.

One particular section of the report stressed the importance of using home equity as a retirement asset, and how reverse mortgages can be a valuable resource for some retirees, however, more work must be done in terms of outreach, affordability and accessibility.

“It does seem, at long last, that reverse mortgages are entering mainstream consciousness,” Munnell writes. “And it may be happening just in time to help millions of Americans who will retire with grossly inadequate 401(k) balances to have a decent standard of living when they stop working.”

Read more at MarketWatch.

Written by Jason Oliva

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  • How about looking into seniors who moved into condominiums and cannot get a reverse mortgage. I am a one of those who is 78. I don;t want to move. I have been here 28 years and my home is paid in full. It is getting harder every year for me to live on Social security. I have been a widow for 45 years and my credit score is over 800. I am a perfect candidate for a reverse mortgage. I am told i can sell my condo and buy a house and get a reverse mortgage. At almost 80 yrs old. How can i maintain a house??? I am not in the best of health, but functioning well. I lost my IRA and my business. I would like to enjoy the rest of my life and not have to pennypinch forever.

    • This is an excellent point. Have you worked with anyone in the reverse industry to help you find out if you could work with your condo association to get your condo HUD approved? If you have not tried this, you should look into it. Find a lender that serves your state and one that will take the time to help you work with your condo association. Many condos are approved, but many are not and we do not have the ability to do a HECM reverse mortgage on any condo not approved by HUD/FHA. It would help many people like yourself if we had the ability to do “Spot” Condo approvals, an option that was lost with the housing crisis. This is something that would help many like yourself and the industry should continue pushing HUD/FHA to revive this option. Best of luck and check out the National Reverse Mortgage Lenders website for a lender in your state that may be able to help you. http://www.reversemortgage.org

      • There are 396 units in my complex—-Did have someone who gave us info aND THE MANAGEMENT said we had to get all units approved. I think we were given the wrong info for approval. The HOA here only manages the common areas. We have 5 sections and they are managed by a president and board and a management company, independently. I am not giving up and i will try to pursue my section of the condo which has 42 units in 7 buildings of 6 all one bedrooms. The rest of the complex is mixed units. I have looked at moving to a approved condo—-and ones for 55 and older. I cannot carry my groceries from a garage to my unit and they are not for disabled people. I can park in front of my condo with no problem. With a reverse mortgage i will be able to live here, even with a disability. Who can i write to , to tell my story and proceed till I give up with despair!!!

    • Ms. Haggerty,

      What ReverseGal2 is suggesting is a most appropriate course of action but for many it is not feasible due to no problem of their own making. Many times COAs know their financial situation will not allow for HUD approval. Sometimes unresolved lawsuits no matter what the expected resolution will not allow for near term approval.

      This is where persistence can pay off. Sometimes those that reverse mortgage loan originators must rely upon are incompetent. What one originator may be incapable another can easily handle. Sometimes there is absolutely nothing that can be done.

      In any case your best course of action is to try and keep trying until your wall becomes insurmountable.

      Your personal financial view and personal perspective are right on point. Let us hope you will find someone who will be able to get HUD COA approval.

  • This article Jason wrote should give us all encouragement. It also brings up a good point that needs to be noticed and talked about. What I am referring to is the point Jason brings up about the positive press the reverse mortgage has been getting!

    Since the implementation of the non-borrowing spouse and FA rulings there has been more positive news media on the HECM product than we ever had and I have been in the reverse mortgage space for over 19 years now!

    We have been fighting negative press ever since the HECM has come into existence, we now finally have something we can use as a valuable tool to sell are product.

    Heck, gather up every positive article you can find, make a scrap book of them and carry it with you, show it off, sure is going to be hard to rebuttal so much positive black & white right up front!

    What else is good to hear is about the community banks in the Pennsylvania area that has hopped into the reverse mortgage arena. We have a tremendous opportunity with small community banks and credit unions. The major problem most of our people have faced is not having the patients it takes to partner up with them!

    The other thing we need to learn is what motivates a small community bank or credit union? Why should they get into reverse mortgages? There are some very good reason why they should and need to have our product available to their customer or membership base, very, very good reasons?

    Good article Jason!

    John A. Smaldone
    http://www.hanover-financial.com

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