While reverse mortgage loan originators frequently receive feedback from their clients and the family members of borrowers, it’s not often that borrowers’ family members weigh in publicly about their experiences.
During the National Reverse Mortgage Lenders Association’s annual conference last month in San Francisco, several children of reverse mortgage borrowers shared their input with attendees—a largely positive message for the reverse mortgage community.
For Leroy and Nora Rodriguez, a reverse mortgage for Nora’s father meant the ability to recover from medical bills relating to a heart attack and an increase in household cash flow.
“[My parents] are happy now because they are stable, increased their ‘income’ and he’s recovering and doing very well,” Nora Rodriguez said during the conference panel.
Prior to his heart attack, however, her father was not as amenable to the option, she said. Despite having little income or pension after having retired from work at a local college, he resisted the idea of tapping into home equity. But several months later, Anita cited the experience of a friend whose mother has a reverse mortgage and said it was the best thing she had ever done. The friend referred Nora and her parents to a lender and introduced them to their originator.
“They are so happy now, and don’t have to pinch,” Nora said.
Another family member of a recent borrower, Anita Chan, is an Oakland, Calif.-based financial advisor. She, too, went through the process of helping her family member, an elderly uncle, obtain a reverse mortgage. Having no children and a limited income due to having place much of his savings into the restaurant business, Chan’s uncle, who lives in the Los Angeles area, brought the idea to her over a recent Thanksgiving dinner.
“Before that conversation, we had never talked about finances,” she recalled. But despite his interest, there were two initial hurdles. First, Chan’s uncle speaks Chinese only, and second, his local community bank does not offer reverse mortgages.
While financial advisors have historically been reluctant to recommend reverse mortgages, Chan says, she was open to the idea. However, she had very little firsthand experience. “I didn’t have a lot of clients who were familiar with reverse mortgages,” she said. “One client was interested, but did not qualify.”
They were able to gain an introduction to a lender through Chan’s credit union and ultimately went through counseling with Chan serving as a translator. Although the initial process was time consuming because of the language barrier, the remainder went smoothly, she said.
“Even with my own parents I tell them, if you have equity and you want to enjoy it, you should go access it. My professional perspective is there are a lot of unanswered questions for seniors. It’s not just for those who have gone through traditional mortgage products; this is a different product.”
As a financial advisor, Chan said she’s very familiar with the scepticism around reverse mortgages.
“A lot of the myth out there is that the bank will take the home at the end. People don’t understand how deferred interest works. They don’t know they can still leave the home to their children with the remaining equity,” she said.
Rodriguez shares a similar sentiment following the experience of her father getting a reverse mortgage.
“We have recommended them to a lot of our friends,” she said. “They are still skeptical.”
Written by Elizabeth Ecker