In light of the COVID-19 pandemic’s tightening, continued grip on the United States, some of the nation’s most prominent mainstream news outlets have turned their attention to the reverse mortgage product concept as Americans continue to seek financial relief after enduring the economic shock that the pandemic has caused.
Because of the newfound financial stress arriving on the heels of a previously well-performing economy, reverse mortgages have garnered another look from many people. While some of the recent mainstream coverage has persisted in its critical look at the product category, some others are taking a more neutral approach, relating to their respective audiences how reverse mortgages can be a potential tool for seniors in specific circumstances.
Here’s a look at recent mainstream press coverage of the reverse mortgage space over the course of the summer.
Forbes: healthcare costs for seniors, and explaining how reverse mortgages work
Health expenses in retirement remain a major influence on the ability for seniors to maintain stability in their post-working lives, but remain surprisingly overlooked as seniors plan out their retirement finances, according to one column appearing in Forbes in June.
“The first finding of this study was that while 71.5% of studied individuals were saving for retirement, only 38.1% were specifically saving for the cost of healthcare in retirement,” writes columnist Eric Brotman. “A huge mistake I see people making when trying to calculate how much of an income they’ll need in retirement is not taking into consideration how much their health care costs will increase.”
Shoring up healthcare costs is an often-cited possible use of reverse mortgage proceeds, as recently reiterated in another column appearing in U.S. News & World Report. Seniors in general already prefer aging in place, and for those seniors who are trying to find a path forward to that goal, a reverse mortgage can provide one such option, the column contends.
More recently, Forbes featured another column explaining how reverse mortgages work, and who is best positioned to benefit from the product features.
“Reverse mortgages aren’t good for everyone. Only certain borrowers qualify, but their structure also only makes them appropriate for certain borrowers,” writes Dock David Treece, member of the Financial Industry Regulatory Authority (FINRA)’s small firm advisory board in the column. “While there are some cases where reverse mortgages can be helpful, there are lots of reasons to avoid them.”
Washington Post: ‘problematic’ home equity access may highlight reverse mortgage potential
Taking a holistic view of home equity access in general, the ability for Americans to access the equity in their homes has only gotten more complicated and even problematic according to housing experts and data analysis appearing last month in the Washington Post.
“As a country, we’re equity rich, but the tightened credit box has locked many people out of the ability to access that equity,” says Nicole Rueth, producing branch manager for Fairway Independent Mortgage Corp. to the Post’s Michele Lerner. This problem has been exacerbated by the recent exits of some larger institutions — like JPMorgan Chase and Wells Fargo — from the Home Equity Line of Credit (HELOC) lending space.
One such option that remains, however, is a reverse mortgage according to Brian Sacks, branch manager with Homebridge Financial Services in Pikesville, Md. to the Post.
“A reverse mortgage is right for the right situation and wrong for the wrong situation,” says Sacks to the Post. “A common misconception is that the bank takes the house at the end of the loan. But when the borrowers no longer live there and there is equity left, they can sell it and keep the equity or their heirs inherit it.”
USA Today: Puerto Rico borrowers continue struggling with hurricane fallout
Over the past year, USA Today has been featuring a series of investigative reports that have examined higher-than-average foreclosure rates among reverse mortgage borrowers, the first report of which prompted strong industry reaction and even an official response from the National Reverse Mortgage Lenders Association (NRMLA). The latest USA Today report took a closer look at reverse mortgage foreclosures in the U.S. territory of Puerto Rico.
“An analysis by USA Today and the Centro de Periodismo Investigativo found waves of reverse mortgages headed to foreclosure in Puerto Rico for reasons other than death, the natural way the loans are supposed to end,” the report reads. “Almost one in four reverse mortgage loans failed from 2014 to 2018 over technical snags, according to the Government Accountability Office.”
In addition to problems stemming from Puerto Rico’s continued recovery efforts from the 2017 hurricanes it endured, there may also be an issue for reverse mortgage lenders who are unfamiliar with certain tax exemptions that Puerto Rico residents have access to, which can lead to consequences for borrowers’ abilities to remain in their homes under the terms of the loan, the outlet says.
Shortly after the report was published, NRMLA revealed some of its ongoing work to alleviate stresses on Puerto Rico reverse mortgage borrowers in a letter submitted to Puerto Rico Housing Secretary Luis C. Fernández-Trinchet, Esq. signed by NRMLA President Steve Irwin.
CNBC: For those who mind ‘pitfalls,’ reverse mortgages can be helpful
CNBC personal finance columnist Jill Cornfield explains how a reverse mortgage can be helpful for cash-strapped seniors, as long as they keep in mind some common “pitfalls” of the product category in a recent column published earlier this month.
Among a series of listed “pros” and “cons,” the pros consist of a borrower having the ability to tap a home’s equity without needing to move out, and keeping the title to the home. For the cons, Cornfield lists “high fees” including an initial mortgage insurance premium; no one living with the borrower under the age of 62 can be considered a borrower of the loan; and less money is ultimately left to the borrower’s heirs.
Additionally, as nursing homes and assisted living facilities have remained some of the highest-profile venues for the spread of COVID-19, options that allow seniors to age in place within their own homes are getting new attention. A reverse mortgage is one possible path forward since it involves physical distancing in a senior’s own home, according to Carolyn McClanahan, a physician and certified financial planner who is founder and director of financial planning at Life Planning Partners in Jacksonville, Fla. in the column.
“[I]n the age of COVID-19, Americans may decide that large groups of older people living together in one place might not be a good idea after all, McClanahan says. This could mean that more people will try to age in place,” Cornfield writes.