Borrowers’ Children Weigh in on Reverse Mortgage Successes

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.

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“[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 

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  • We rarely hear from the children with success stories. That generally does not make good news. We more often hear from children who are upset that their parents are spending their inheritance, or from children who either did not know their parents had a HECM on the property or had no real understanding of how a HECM works and are suddenly finding out that they are not getting a windfall. In the end, as I told my own parents many years ago (and I am happy to say my brother did as well), it is their money, not mine. They can do what they want with it and they do not have to answer to me, nor do they even have to tell me about it. It would be nice to know what is going on so that I can be ready to deal with issues that will come up when they pass, but it is not required.

    Too many of the negative articles that I see having to do with children are the ones where they are complaining about the evil reverse mortgage company taking away the house that they thought was theirs. It never was theirs to begin with, it was their parents’ house, to do with what they liked.

    Now, that being said, there are issues after a person passes with some servicers. They do not acknowledge the children or talk to them, even after probate has started. Some state’s probate laws do not work on HUD’s schedule, so that causes additional problems as well. Things do not always work perfectly, but by and large most negative stories are not the servicers’ fault. It is good to hear some positive stories.

    Frank J. Kautz, II
    Staff Attorney

    Community Service Network, Inc.
    52 Broadway
    Stoneham, MA 02180
    (781) 438-1977
    (781) 438-6037 fax
    [email protected]

  • Good article and encouraging to read.

    I am sorry but I don’t entirely agree with Frank Kautz! Yes, I see those children that are closed minded and do not want to see the benefits a HECM can give to their parents. I also see many children that care more about losing their inheritance than the quality of life a HECM can give their parents for their retirement years!

    However, I have talked to many children that do have their parents interest at heart and want to see their parents live a better quality life in there retirement years.

    In fact, I have run across many children who have taken it upon there selves to assume a lot of the responsibilities of caring for their parents, because of the parents lack of resources, the HECM came in at the right time to not only save the day for the parents but it also took a great deal of responsibility away from the children.

    Consequently it became a win, win situation for both parent and children. Also, the children wound up spending more quality time with their parents!

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

    • Hi John,

      I am not entirely sure that we disagree, I am just pointing out that most of the negative news stories come from children who either did not know about their parent’s HECM or did know, but were not happy that their parents went forward with it.

      I do agree that there are many, many children who are very happy that their parents went forward with the HECM because it made their parents’ lives easier. These are the children that are more concerned with their parents than what they might get later. These are the ones that I want to hear more from, but, sadly, positive news does not sell as well as negative news.

      Frank J. Kautz, II
      Staff Attorney

      Community Service Network, Inc.
      52 Broadway
      Stoneham, MA 02180
      (781) 438-1977
      (781) 438-6037 fax
      [email protected]

      • You may be right Frank,thanks for pointing that out! You and your family make it a good weekend for yourselves!

        John

      • John,
        Hope all is well with you and yours.
        Can you please give me a call at your convenience? (727-224-3859)
        Thanks,
        Mike

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