CBS: Reverse Mortgages Don’t Get No Respect

Dubbing reverse mortgages “the Rodney Dangerfield of retirement,” CBS MoneyWatch touted the Home Equity Conversion Mortgage program for the second time in a week.

Steve Vernon, a consulting research scholar for the Stanford Center on Longevity at Stanford University, rounded up the recent scholarly research on reverse mortgages for CBS readers, breaking the ice with a reference to the comedian and his catchphrase.

“Aging boomers probably remember Rodney Dangerfield as the comedian who lamented, ‘I don’t get no respect,’” Vernon wrote. “Are reverse mortgages the modern equivalent in the retirement planning world?”

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The answer, Vernon concludes, is yes. Citing scholar and HECM cheerleader Wade Pfau’s book, “How to Use Reverse Mortgages to Secure Your Retirement,” walks through the most common misconceptions, starting with the frequent complaint about origination costs.

“Just like conventional mortgages, reverse mortgages have both upfront and closing costs that can be reduced by shopping around for competitive lenders,” Vernon writes. “If a reverse mortgage is the best or only way to buy your retirement freedom, it might be well worth the cost.”

Vernon also points out that reverse mortgages can help prevent older people from having to move in with their adult children, and mentions the recent improvements to the program that have expanded it beyond the pool of “desperate borrowers,” such as mandatory counseling and protections that allow non-borrowing spouses to remain in their homes after the death of their borrowing partner.

The CBS article provides a handy bullet-point list of ways borrowers can benefit from a reverse mortgage from Pfau’s book, such as paying off a conventional mortgage, remodeling their homes to adapt to various aging needs, or deferring Social Security payments until they reach their maximum amounts.

After a standard and wise warning about not taking out a HECM if a borrower intends to leave their homes soon, Vernon concludes on a high note: “If you have substantial home equity, if your financial resources aren’t sufficient to enable you to retire and if you really want to retire, you’d be wise to explore all of your options to deploy your home equity.”

Vernon’s article represents the second plug for reverse mortgages in CBS MoneyWatch in recent days: Reporter Kathy Kristof also extolled the virtues of the program on the site in an article that called the program “smart” for seniors.

Read Vernon’s full article on CBS MoneyWatch here.

Written by Alex Spanko

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  • Consider, in the face of this discussion, the plight of the lonely reverse mortgage (11 year veteran) loan officer that gets fired without notice for undefined low production, after using every possible tool he has to find people willing to deal with the misdirection of the reverse mortgage industry, leaving behind his pipeline of prospects who dare to be identified among those “considering”. It is, after all, the plight of those who care for needy home owners who react against the perceived negatives of the reverse mortgage. What else can the industry do to unify in the face of this ongoing firestorm? On my webpage, these people come to investigate drawn by positive tweets, posts and emails — looking through nearly eighty positive articles about reverse mortgages — most of them taken from the pages of Reverse Mortgage Daily, but will not leave a phone number or email address behind to identify themselves. Without a bank to support his efforts, he can do little or nothing about it (except give away his prospects to other LOs who need to survive in order to serve his pipeline residents) hopeful that somebody with bank credentials will pick up on his passion for those qualified to use their own home equity to survive retirement — and keep the snowball rolling to save his career on the RM firing line. Yes, he can also watch his prospects go across the street and order another forward mortgage of some kind that come with payments he can’t afford in a battle with declining income.

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