To anyone who has worked in this industry for some time, the reputation challenges of reverse mortgages may come as no surprise. But while the growing acceptance of reverse mortgages has largely nodded to newer program changes enacted over the last few years, more recent developments in the past week signal a turning of the tides for reverse mortgages, according to a recent MarketWatch article.
Since the implementation of the Financial Assessment and new non-borrowing spouse policies, reverse mortgages have garnered arguably the most positive press they have ever seen. The advent of these new updates also caught the attention of the financial planning community, which has in turn produced a bevy of research and articles on how reverse mortgages can be effectively incorporated into a retirement planning strategy.
Last week, the New York Times published an article on how community banks are bringing a “Main Street respectability” to the reverse mortgage product.
The article highlighted two community bankers serving the Pennsylvania area who began offering reverse mortgages during a time when other lenders were shying away from the product. An emphasis for both companies was the importance of actively engaging prospective borrowers and their family members to ensure everyone involved understands the product.
“The customers who end up taking out the loan appear to be pleased with the product,” writes Alicia Munnell, director of the Center for Retirement Research at Boston College, in the MarketWatch column. “And the fact that community bankers are offering reverse mortgages is lending respectability to this ‘much-maligned’ but increasingly necessary product.”
Just how necessary reverse mortgages will become for many American retirees was further detailed in a report released last week by the Bipartisan Policy Center’s Commission on Retirement Security and Personal Savings.
In its 152-page report, the Commission outlined several policy issues targeted at improving the resources available to help millions of low- and middle-income Americans sufficiently prepare for their financial future.
One particular section of the report stressed the importance of using home equity as a retirement asset, and how reverse mortgages can be a valuable resource for some retirees, however, more work must be done in terms of outreach, affordability and accessibility.
“It does seem, at long last, that reverse mortgages are entering mainstream consciousness,” Munnell writes. “And it may be happening just in time to help millions of Americans who will retire with grossly inadequate 401(k) balances to have a decent standard of living when they stop working.”
Read more at MarketWatch.
Written by Jason Oliva