As part of a statewide initiative to improve financial literacy for senior citizens, a banking regulator in one high-volume reverse mortgage state sees a greater need to teach more elderly homeowners about Home Equity Conversion Mortgages (HECMs).
Next month, Pennsylvania’s Department of Banking and Securities will host several educational events focused on a variety of financial topics of interest to seniors, including a session titled “Understanding Reverse Mortgages” on October 27.
The presentation, which will be held at Schuylkill Township Hall in Phoenixville (Chester County), intends to help seniors and their families have a better understanding of these complicated and often misunderstood financial products.
“The Department [of Banking and Securities] was concerned that reverse mortgages would become a big issue for consumers, and so we felt it was important to have unbiased information for consumers to understand exactly what the reverse mortgage process is like,” said Katrina Boyer, consumer outreach liaison for the Department.
Boyer, who has been presenting about reverse mortgages for Pennsylvania’s Department of Banking and Securities for the past 3-4 years, finds that the sessions have been well-attended by seniors and their families over the years.
Discussion points typically cover various aspects of reverse mortgages, including the fees associated with them, the importance of counseling sessions, how loan proceeds may affect certain federal benefits, and what happens when the borrower ultimately vacates the property.
“We also spend a decent amount of time talking about the fact that a reverse mortgage is a non-recourse loan, because that is something consumers need to understand,” Boyer told RMD.
The push for educational outreach on financial services is part of Pennsylvania Governor Tom Wolf’s Consumer Financial Protection Initiative introduced last fall. A four-pronged approach to enhancing the financial literacy and resources available to Pennsylvania residents, one goal of the initiative specifically seeks to protect the well-being of senior citizens.
With the growing population of Baby Boomers (b. 1946-1964) reaching retirement age at a rate that has been commonly noted as 10,000 people turning age 65 every day, there is a pressing need to educate this demographic on products that could potentially benefit their retirement. And that includes reverse mortgages.
Seniors are invited to send the Department inquiries and complaints regarding financial services, including reverse mortgages. While the agency’s 1-800-PA-BANKS helpline does receive calls about reverse mortgages on a regular basis, the Department notes there are other topics of higher concern for consumers right now, particularly issues related to debt collection and payday lending.
One of the biggest complaints the agency does receive about reverse mortgages, Boyer said, concerns consumers who haven’t told their family members about their decision to obtain these loans.
“It’s important for consumers to have a conversation with their children and loved ones,” she said. “It’s important for everyone to be together on this.”
Pennsylvania is one of the leading states for reverse mortgage volume, ranking eighth overall with 672 HECM endorsements year-to-date during the first half of 2016, according to industry data tracked by Reverse Market Insight.
A calendar of events for upcoming presentations from the Department of Banking and Securities can be found here.
Written by Jason Oliva