Bridging two industries that have a shared interest in the ability of senior individuals to age in place, reverse mortgage stakeholders presented a webinar discussion last week to an audience of in-home care professionals. Largely focused on presenting the benefits of reverse mortgages for home care recipients, the panel also dispelled common myths around the product.
The Home Care Association of America (HCAOA), a primary trade association for the in-home caregiving industry, presented the webinar as part of an ongoing three-part series called “Using Home Wealth to Fund Home Care,” the goals of which are to provide tools so that people in the home care industry can discuss clients’ major asset: the home.
One of the purposes of the series is to illustrate how someone can use their home in “a safe way to finance the services that home care organizations provide,” said webinar moderator Shelley Giordano, founder and chair of the Funding Longevity Task Force at the American College of Financial Services at the top of the presentation.
The initial webinar in the series also featured Professor Jamie Hopkins, director of the New York Life Center for Retirement Income and a taxation professor at the American College of Financial Services, and Dr. Barbara Stucki, the principal at BRStucki Consulting and a colleague of Giordano’s at the Funding Longevity Task Force.
The panel focused on benefits as well as myths that can be helpful for home care professionals to discuss with their clients, with the first program having been designed to cover the basics of financing home care through the employment of a Home Equity Conversion Mortgage (HECM).
In terms of some of the common misconceptions associated with reverse mortgages, Professor Hopkins offered facts for the purpose of dispelling those myths, some of which include the idea that the bank owns the home; a borrower’s heirs always lose the home as inheritance; the set up fees are prohibitively high; the idea that there’s “no way out” of a HECM arrangement; and the thinking that a reverse mortgage is a “last resort.”
The question of why home care should maintain its viability for seniors, particularly if they wish to remain in their homes and not transfer to an assisted living facility of some kind was explored. Primarily, in addition to being beneficial for those wishing to stay in their homes, employing home care also benefits seniors themselves and the home care industry at-large, Stucki said.
The growing American senior population puts stress on long-term care needs, along with the fact that older people are both more likely to be homeowners themselves, while also being more likely to want to maintain their homeownership as opposed to relinquishing it by changing their residence to something like an assisted living facility, Hopkins detailed.
He then offered a hypothesis concerning the reason that more older Americans are not using home equity as an employable asset in funding their retirements, which includes bad press surrounding the reverse offering.
“They’re easy stories to write,” Hopkins said, describing a scenario in which a sympathetic senior who leaves their home after engaging in a reverse mortgage gets picked up by a news outlet.
“The reality of that situation usually surrounds the payment of property tax, and is not with the underlying mortgage,” he said.
A confluence of other factors also work against the reputation of the reverse mortgage, Hopkins said, going on to name factors such as peoples’ aversion to infomercials with celebrity endorsements, financial advisors being uneducated in relation to housing wealth and lines of credit, and a “misunderstanding” of how reverse mortgages have evolved over the course of their existence.
Hopkins also detailed the reasons for the HECM product’s legitimacy, detailing its insurance by the Federal Housing Administration, along with the requirement of mandatory counseling to ensure that a borrower understands every aspect of the loan before closing.
Shelley Giordano then gave the audience an overview of steps required to get a reverse mortgage, before providing sources of impartial information (like the Department of Housing and Urban Development booklet “Use Your Home to Stay at Home”) should a prospective borrower request it.
The webinar is the first in a series of topics relating to reverse mortgages and home care synergies. Detailed webinar information and registration links can be found at HCAOA’s dedicated webpage for the series.
Written by Chris Clow