A new article from Bank Investment Consultant Magazine writer Howard J. Stock covers the changes HERA brings to reverse mortgages and details how some broker dealers are approaching the product.
According to Higher Loan Limits for Reverse Mortgages, many broker dealers remain wary of reverse mortgages, which Howard writes are regulatory hot potatoes for advisors. AARP legal policy director David Certner added that it’s not a good idea to invest money borrowed at a cost of around 10% of the total loan unless the circumstances are dire. "To put [reverse mortgage] money into an investment product that also charges fees doesn’t make much sense," he says.
ING owned Primevest, a broker dealer declined to comment on the new limits and Raymond James said it won’t let any of its clients invest funds raised though reverse mortgages.
But for some retirees who either haven’t saved enough or who have been slammed by recent market turmoil, the new limits may make reverse mortgages a welcome option. But "If I was a financial advisor, I’d look at all other sources before tapping reverse mortgages," Certner says.
Mr. Certner, good thing you’re not a financial advisor.