A syndicated financial advice columnist who once only recommended reverse mortgages as a last resort has changed his tune.
In response to a question from a reader about why people are afraid of reverse mortgages, Benny L. Kass — whose work appears in the Chicago Tribune, Washington Post, and other national papers — said that in the past, he was turned off by high upfront costs, lax regulation of the industry, and television commercials featuring well-known pitchmen.
“For years, celebrities like Fred Thompson, Henry Winkler, and Pat Boone were touting the benefits of reverse mortgages, but they were not disclosing all of the facts, all the pros and cons,” Kass wrote.
But Kass allows that the Financial Assessment changes, as well as the counseling requirement, have convinced him that borrowers can’t enter into a Home Equity Conversion Mortgage without learning about the product.
That’s why he writes that it “probably makes sense” for the letter writer’s friend, a man who owns a home outright and has no spouse or heirs, to take out a reverse mortgage in order to help with cash flow. Still, Kass advises potential borrowers to explore alternatives before signing on the dotted line.
“I will continue to strongly suggest that anyone considering a reverse mortgage should look at all the options first, such as refinancing, selling your present home and downsizing, or getting loans or gifts from relatives,” he concludes. “Once you have carefully reviewed all options, then make your decision.”
Written by Alex Spanko
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“For years, celebrities like Fred Thompson, Henry Winkler, and Pat Boone were touting the benefits of reverse mortgages, but they were not disclosing all of the facts, all the pros and cons,” Kass wrote. Please point me toward the advertisement that discloses all the pros and cons. If companies did that, all the ads would be accompanied by the huge list of ‘side effects’.
“Yes, in your friend’s situation, since he has no immediate family, a reverse mortgage probably makes sense.”
The above comment from Kass’ article shows that, while he may have begun to see the light, he has a ways to go before gaining a full understanding of the HECM program. At least he is headed in the right direction!
Jim beach’s comment is right on target, REVGUYJIM is right on as well, Benny Kass is headed in the right direction!
When Kass states that the Financial Assessment changes, as well as the counseling requirement, have convinced him that borrowers can’t enter into a Home Equity Conversion Mortgage without learning about the product. Well, that is definitely not the case, we are finding borrowers even more confused today than straightened out in their minds about HECM’s!
This is exactly why it is more important than ever in today’s environment that our loan officers and people in the industry that are in contact with the borrowers are very educated. Educated with all the changes that shave occurred and be prepared to take the time to explain in detail the changes that have occurred to our prospective senior borrowers!!
Kass also states that, “I will continue to strongly suggest that anyone considering a reverse mortgage should look at all the options first, such as refinancing, selling your present home and downsizing. My friends, I would think that is a given as far as I am concerned!
As far as Kass suggesting getting loans or gifts from relatives, NO, NO, NO, I strongly suggest to NOT putting ourselves in a position suggesting that to a prospective borrower! Again, that is my opinion only!
John A. Smaldone
http://www.hanover-financial.com