Reverse Mortgage News

Happy New Year's Day! Did you know that today is also Baby Boomer Day? The baby boomer generation started off with the first person to be born on January 1st back in 1943 (widely recognized as being Kathleen Casey-Kirschling). And today is the day that the entire generation to follow her is honored.

But not all about baby boomer life is something to be celebrated. Recent reports indicate that baby boomers have a lot on their plates and a lot of concerns for their futures. The most important of these is health and anti-aging. But running a close second to that are the fiscal concerns of baby boomers. And unfortunately, many baby boomers aren't doing anything about it.

A recent report at InRich.com has found that most baby boomers are still spending as though they are in the early days of their careers. And, of course, they aren't. In fact, most of them are nearing or past retirement. And that means that the debt they're racking up doesn't have much hope of being paid off.

Enter the boom in the reverse mortgage market. Many baby boomers are finding that they need to seek out alternative methods of paying off the debt that's been accumulated. And they're also finding that they need a new source of income to support the spending that they don't have the will to stop. The reverse mortgage is paving the way for baby boomers to resolve both of these issues.

Question of the Day: Do you think it's a problem that baby boomers are using the reverse mortgage to continue spending or is it a good solution to the desire to want to have your cake and eat it too?

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We often see headlines in the news about problems that people have had with reverse mortgages. However, the news is sometimes filled with good news and if you look hard enough, you can find that news about reverse mortgages. One example of that was recently seen in a Michigan newspaper. The Kalamazoo Gazette has recently reported on the positive reverse mortgage experience that one of its residents has enjoyed.

The article describes the way that an eighty year old resident has gained some financial security as a result of the reverse mortgage loan. The resident was struggling to meet his monthly bills. Using credit and loans to pay expenses was causing increased debt and higher monthly minimums. It seemed like there was no end in sight. And then the reverse mortgage loan turned things around. He can now pay his bills and even have some spending money at the end of the month. This is the way that reverse mortgage loans are supposed to work!

Any good finance professional will tell you that it doesn't always work out that way. There are risks and you need to be aware of them. The major one noted in the article is the reduced inheritance that you'll be passing on to your kids in some cases with the reverse mortgage loan. However, as the tale points out, this can be a minor price to pay for being able to reduce the burden of debt in your daily life.

Question of the Day: Do you believe that there are more reverse mortgage stories that went right or that went wrong?

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As a consumer interested in obtaining a reverse mortgage home loan, you are probably highly interested in reducing the risks associated with obtaining this type of loan. There are many different things that you can do to protect yourself from predatory lenders. The most important of these is to arm yourself with information about reverse mortgages so that you can make good choices about your loans. But in locating this information, there is something that is equally as important: you should keep an eye out for sales pitches.

The Long Island Business News recently reported on the reverse mortgage loan. They provided important information to readers (including the news we recently reported about the involvement of the Senate Special Committe on Aging in this issue). And one of the main things that they point out is that the "bad lenders" (also regularly called "predatory" or "unscrupulous" in the news) are those lenders which are pushing too hard to get you to accept a reverse mortgage loan.

A good lender will provide you with information about the reverse mortgage loan. He or she will explain the options that are available to you and will give you ample opportunity to ask questions. If you find that a lender is doing less of this and more of a spiel, you want to step away from the situation. Get advice from a third party, such as a financial planner, if you're not quite sure that your lender is giving you all of the facts.

Question of the Day: What steps would you take to be more assertive in dealing with a reverse mortgage salesperson?

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We have frequently heard of problems with reverse mortgage loans, including that there are sometimes reverse mortgage scams that cause people to unwittingly go into a significant amount of debt. However, there is a flipside to that story. The reverse mortgage loan can be a means of getting yourself out of a trouble when another type of scam threatens to ruin your life.

An example of this was reported on recently by TampaBay.com. (The article can be read in full here; scroll down to the center of the page for the story.) The gist of the story is that a couple was scammed out of a significant amount of money as a result of their relationship with a fraudulent grant writer. The writer was caught and imprisoned but that didn't give the couple their money back. The debt was threatening to cause them to foreclose on their home. However, they are reviewing the option of a reverse mortgage loan to resolve the problem.

It's unfortunate that scams happen. You should always be cautious in your dealings with others, particularly where significant sums of money are concerned. But it's nice to realize that there are loan options out there, such as the reverse mortgage loan, that can get you out of truoble if you do succumb to a scam. Work with a finance professional to review your options.

Question of the Day: How would you get out of debt if caught by a scam?

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You might have an array of reasons for getting a reverse mortgage loan. But most of them boil down to (or at least some way connect back to) the desire to remain in your home even though doing so is expensive. The reverse mortgage loan gives you the funds to do that. And once you've obtained those funds, you can settle down and really start enjoying that home.

One of the best ways to do that is by respecting the home and yourself through keeping it neat and clean. And what better day to do that than today? Debbie Williams, a leader in the personal organization movement, has declared (and sponsored) January 7th to be Organize Your Home Day. In honor of it, take a few moments to think about the organization of your home and how it could be better planned out to reduce clutter and improve both design and efficiency.

When you are on the brink of losing your home (as you might have been before obtaining the reverse mortgage loan that you got) you start to realize just how important it is to you. Now that you have the money and time to spend on the house, make sure that it reflects this special feeling that you have for it.

Question of the Day: What one step could you take today to better organize your home in honor of the holiday?

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If you are going to obtain a reverse mortgage loan, you are going to need to work with some professionals in the finance industry. To get the best loan for your personal financial situation, you'll want to know which professionals should be consulted during the course of obtaining the loan.

Here are some of the reverse mortgage professionals that you'll want to know about:

- Reverse Mortgage Lenders. You will need to get the loan from somewhere, probably a bank, which means that you'll need to work with the lender who is assisting you in completing the loan transaction.

- Financial Planners. You should get third party advice from someone who doesn't have a vested interest in which loan you take. A financial planner can give you tips on the loan process as well as help you set up a budget for using the loan.

- Elder Care Attorneys. When dealing with financial matters, you might find that you have some complicated money matters come up. If you're going to be involving other people in the transaction (such as children who have partial ownership of the home) or you have concerns about how Medicaid and other income might be affected, a consultation with an attorney would be a good idea. See an example of this here.

- AARP representative. If you're an AARP member with questions about a reverse mortgage, these professionals might be of some assistance.

There are other finance professionals who can assist you with a reverse mortgage loan but these are the ones that you should have at the top of your "to call" list.

Question of the Day: Which reverse mortgage professional are you most likely to speak with?

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Anyone who has a home that has any equity can make use of a reverse mortgage loan. However, some homes are better candidates than others for really making great use of the reverse mortgage loan. Here are some of the qualities that make a home stand out as terrific for this kind of loan:

- Homes that have mortgages which are paid off or are mostly paid off so that the reverse mortgage will provide a lot of loan money.

- Homes that are in disrepair. The reverse mortgage can help fund the renovations that are needed.

- Homes that have grown in value since they were purchased.

- Suburban homes. Although urban homes can also benefit from the reverse mortgage, the suburban home tends to be a more common home used to get the loan.

- Homes that have become tax burdens to their owners.

If your home doesn't fit into these categories, it's okay - you can still get a reverse mortgage loan and use it well. Ask a finance professional about your options.

Question of the Day: Which other home qualities would be good for a reverse mortgage loan?

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A California man is facing a court trial as a result of a neglect case. He is charged with leaving his elderly mother-in-law "to rot" in her home. The gist of the case is that the man was her primary caretaker but failed to take care of her. She was found in the home amidst trash, feces and rotting food. Her health was in poor condition.

There are many different aspects of this case for the courts to deal with in determining what the man's responsibility was. However, the prosecuting attorney says that one of the things the man can not claim is that taking care of his mother-in-law was too difficult. The attorney says that if that was the case, the man should have gotten elder care for his mother-in-law instead of taking on the burden of her care himself.

Where would he have gotten the many to pay for that care? The attorney suggests that they could have made use of a reverse mortgage loan to fund either in-home or nursing home care. Then the woman wouldn't have just been "left to rot".

Learn more about this case here.

Question of the Day: Do you believe the man should serve prison time as a result of this case?

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We're almost halfway through January and that means that we're about halfway done with Financial Wellness Month. Of course, you should be concerned about your financial wellness during every month of the year. But January is specifically set aside by many people to focus on their financial wellbeing.

Here are some things that you still have time to do to celebrate the holiday this year:

- Contact a financial planner. The best way to get a good grasp on your financial health is to work with a professional who is trained in helping you out.

- Review your reverse mortgage options. If you already have a reverse mortgage, make sure that you understand the terms and that you budget the funds from it appropriately. If you don't, look into the options you have to make this income-booster benefit your financial health.

- Create a budget. Irrelevant of the reverse mortgage, you should make a budget for the year. Know what you have and what you spend so you can know what you need to do to be more financially well-off.

Question of the Day: What else can you do to celebrate Financial Wellness Month?

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When we talk about reverse mortgages, we are almost always talking about those loans which are obtained from American banks and lenders. However, reverse mortgages are applicable to people in other parts of the world as well. India is a currently a country which is exploring the options for using the reverse mortgage loan to assist elderly homeowners with paying their bills.

Banks in India are currently seeking clarification from the Reserve Bank of India about the rules associated with reverse mortgage loans.

Finance Minister P Chidamabaram, in his 2007-08 Budget, had stated that NHB will introduce a ‘reverse mortgage scheme’ for senior citizens. (source)

Banks in India are already trying to implement this scheme. However, they are finding that there is some confusion about the "risk weights" to be assigned to reverse mortgage loans. The lending institutions will have to continue to work out the details of reverse mortgage loans because of their relative newness in the Indian community.

Question of the Day: Do you think that the reverse mortgage loan will gain the same type of popularity in countries like India as it has in the United States?

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Some people don't realize that taking out reverse mortgages requires paying upfront fees. In fact, people who have obtained reverse mortgages sometimes don't even realize this. That's because the fees are frequently rolled into the total cost of the mortgage so that you don't ever realize that you're paying something for them.

This isn't some type of scam. It's just the way that mortgages work. All mortgages require that fees be paid so that the professionals assisting with the mortgage can keep their careers. The upfront cost of the reverse mortgage may be the same approximate cost or higher than the cost of a traditional mortgage. But since it's coming off of the top of the equity that you have available, it's not as though you're really paying these costs out of pocket.

Common fees that you may expect to be a part of the reverse mortgage loan process include origination fees, mortgage insurance premiums, document preparation costs, title search fees, title insurance fees and the costs of surveying the property. You can learn mroe about this from NewsObserver.com or speak with a financial planner for better understanding.

Question of the Day: Did you realize fees would be associated with your reverse mortgage?

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You will find that there are many news reporters out there who are putting a negative slant on their coverage of reverse home mortgage loans. These news reporters usually have a storyline which revolves around an elderly person who didn't understand the terms of their reverse mortgage loan and ended up losing, or almost losing, their homes. However, this is not as common as news reports make it out to be.

The Business and Media Institute recently pointed to one case of news reporting that relied wholly on anecdotal evidence to draw wide-reaching conclusions about reverse mortgage loans. In other words, the report took one story of one woman who was "scammed" by a reverse mortgage lender and came to the conclusion that reverse mortgages are scams. (Incidentally, it doesn't sound like she was scammed so much as that she didn't take any responsibility for learning about the details of her reverse mortgage loan).

There are certainly bad lenders out there. And there are certainly people out there who don't understand their loans and get themselves into financial trouble because of it. But when the news takes stories like these and uses them to act as if they are providing factual information about the statistical benefits or drawbacks of reverse mortgages, they're doing a disservice to their readers.

Question of the Day: Do you think your local news slants its coverage of reverse mortgage loans?

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We always love to hear stories about when a reverse mortgage works out in someone's favor. That's because the reverse mortgage is more often good than bad but it's usually the bad that makes the news. A recent North Carolina news article provided a success story about how the reverse mortgage assisted one of the state's residents.

The woman, who is in her eighties, was advised by her adult son to take out a reverse mortgage on her home. The mortgage gave her $2000 up front to assist her with immediate expenses. It also set up a line of credit which she has since accessed to make necessary repairs to the roof of her home.

Her son explains that she wants to live in the house until she dies, whether that's next year or in twenty years.

One lender sees it this way: "As I tell people, 'You have worked all your lives to pay for this asset. Now is the time for that asset to pay you back.' " (source)

The reverse mortgage is something that people can use for different reasons but more often than not will work out in their favor.

Question of the Day: Do you have a reverse mortgage success story to share?

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At the beginning of this week, we took a look at news about reverse mortgages in India. This brings up some additional questions about reverse mortgages in other parts of the world. More specifically, it brings up the question of how a person's culture may influence their decision to get a reverse mortgage loan.

Culture vary greatly in their treatment of the elderly people in their communities. Many Indian and Asian families still follow traditions which encourage children to take care of their parents. Families often share homes with their parents and in-laws when the older person needs assistance as they age.

In Western culture, we tend to be more focused on youth. Young adults don't always feel the same sense of commitment to taking care of their parents that individuals of other culture may feel. As a result, the aging adult may be in a position which requires finding their own solutions to financial and housing problems, solutions which include the reverse mortgage loan.

As the world changes and cultures influence one another, we are seeing both sides of this puzzle come towards each other. Western children are taking more responsibility for their parents. Eastern children are working towards caretaking solutions that don't involve living with the in-laws. The happy medium between these two ends may be seen when adult children assist their parents in planning out their financial futures through obtaining and using reverse mortgages and other income-generating tools.

Question of the Day: How do you think culture impacts reverse mortgage adoption?

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The reverse mortgage loan is a terrific way for many people to access their home equity in order to obtain the income that they need later in life. However, reverse mortgages aren't right for everyone. For one thing, they generally require that you be sixty-two years of age or older for loan approval. For another, the terms aren't always appropriate to the needs of every borrower.

A San Francisco company has cropped up to offer something similar to a reverse mortgage loan which might be more appropriate for certain types of borrowers. It is particularly useful to people who are mainly interested in the reverse mortgage as a source of investment income.

The REX Agreement allows homeowners to access approximately ten percent of their home's value for cash. In exchange, they give up some home equity in the future. REX is banking on real estate costs rising; if they fall, the home owner and REX both split the losses.

Speak to a financial planner with knowledge of the REX Agreement to determine whether this is something that would be appropriate for you. Make sure to ask about how it compares to the reverse mortgage for your unique situation.

Question of the Day: Do you think home equity for investment is a wise idea?

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People who were alive during The Great Depression continue to have a lot of lingering habits related to that experience to this day. Many of them will hide money under the mattress out of fear that the banks will suddenly shut down on them. And many refuse to consider getting assistance from reverse mortgages because they don't want they bank to "own" their homes.

What people of younger generations are trying to let these older folks now is that we're not living in The Great Depression anymore. The reverse mortgage can be a way to access cash when you don't have enough of it. Older folks may not want to place their home on the line because it was the one asset they had during The Depression. However, they need to understand that they can continue to live in their homes until they pass away using a reverse mortgage option.

Change is difficult. And it can be hard to move on past experiences that were so trying and traumatic. But that's why it's the responsibility of the younger generations to make sure that older folks know about the ways in which life has changed.

Question of the Day: Do you believe a refusal to obtain a reverse mortgage could be linked to distrust of lenders resulting from The Great Depression?

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We're happy to say that there was yet another reverse mortgage success story in the news recently. The Daily Progress reported on a woman in Charlottesvillle who obtained a reverse mortgage loan recently.

Here are the details:

- The woman is 75 years old.

- She had lived in her home nearly twenty years, moving there because she particularly liked the community around her.

- She had become accustomed to a comfortable lifestyle allowing her to make some nice purchases for herself.

- Starting to feel the money crunch, she became concerned about what she should do. Her son told her about the reverse mortgage.

- She opted for a line of credit and a monthly check to help her keep her home and maintain her lifestyle.

Learn the full story here.

All of these reverse mortgage success stories that are cropping up seem to point to the fact that this is an increasingly good option for people today.

Question of the Day: Can you point us in the direction of another reverse mortgage success story?

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We normally hear about homeowners using a reverse mortgage loan to obtain additional income which allows them to remain in their homes despite financial difficulties. However, there's an interesting ongoing case in which a reverse mortgage loan may be used to obtain money for a home that's already been demolished. The demolition is a city's effort to remove a home considered to be a health hazard and the money from the reverse mortgage would go to pay the fines associated with the cost of the demolition.

The story began several years ago when it was discovered that a five-and-a-half acre property was filled with junk - or what the property owners considered to be "recycled goods". They had been collecting these goods (which included food waste) for approximately two decades. As you can imagine, the place was filled to the brim. The site was considered to be a fire and safety hazard and the city began removing the recyclables last year.

It is expected that the recylable material will fetch half a million dollars which will go towards rebuilding the home in a proper fashion as well as paying for the cost of the demolition. The additional funds that will be needed will come from a variety of sources including possibly a reverse mortgage loan on the home.

Learn more here.

Question of the Day: When has recycling gone too far?

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There are a few famous faces that are traditionally associated with the reverse mortgage loan. James Garner and Robert Wagner are the two names that typically come to mind. But there might be a third name on the lips of people who want to know the names that support this type of loan: Jack Kemp.

The name might be familiar to you because of his role in politics - he has been a Vice Housing Secretary. Or perhaps you know the name because you're a football fan and he was once a famous football player. Now you'll know him from his face as spokesperson for a specific mortgage company that specializes in reverse mortgages. (Learn more here.)

At seventy-two years of age, Kemp is in the perfect age bracket to be speaking on reverse mortgages. It is people about ten years his junior that first start thinking about the reverse mortgage but it's around his age that people start acting on those thoughts. With a few years of retirement behind them but a lot of years left to life, this age group relies on reverse mortgages to keep them going.

Question of the Day: How do you feel about reverse mortgage celebrity endorsement?

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Many people know that they can access money through their home equity by using a reverse mortgage loan. However, a large percentage of those people don't know what their options are for receiving that money. They'd probably be happy to learn that they can get it in almost any type of payment plan that suits their needs.

Here are the five forms of reverse mortgage payment as laid out by the U.S. Department of Housing and Urban Development:

1. Monthly payments. This is called tenure and allows a set monthly payment for the duration of the time that the residence is occupied by the homeowner.

2. Modified monthly payments. This combines the first option with a line of credit.

3. Term payments. These are also monthly payments for only a set period of time.

4. Modified term payments. Term payments with a line of credit option.

5. Line of credit. The borrower could opt to skip the monthly payments and get only a line of credit.

Learn more about what HUD's rules on reverse mortgages are here.

Question of the Day: How would you take your reverse mortgage payments?

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There are two different types of rates that are available on most loans: variable (or adjustable) rates on fixed rates. There are pros and cons to both of these types of rates but many people find that the fixed rate is the best deal for them. This was an upsetting fact to many reverse mortgage borrowers in the past because these loans weren't readily available in a fixed rate format. However, the HUD has recently approved the first fixed-rate reverse mortgage loans for lenders to begin offering them to their borrowers.

There remain problems with the fixed rate as it applies to reverse mortgages. They have different features and may cost more to obtain initially. However, they may save costs for the borrower in the long run and have the potential to provide more opportunities for certain people. In order to determine what type of reverse mortgage rate is right for you, you should always speak to a financial planner with an unbiased perspective on the situation.

Question of the Day: Cast your vote - fixed rate or adjustable rate?

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Reverse mortgages loans are a tool used by senior citizens to access much-needed cash. Unfortunately, they are also a tool used by scammers to eke money out of those senior citizens. Attorney General Bill McCollum recently issued a warning to seniors considering reverse mortgages that these scams are out there and should be avoided. He notes that reverse mortgages from legitimate lenders are a good way for seniors to get the money that they need but gives asks them to be cautious in selecting the source of their loans.

“When our senior citizens are concerned about finances and are seeking a legitimate option for financial relief, they should not have to worry about predatory lenders or brokers trying to capitalize on their precarious position,” said Attorney General McCollum. “Consumers should take every precaution to avoid scams and situations which could leave them in even worse financial shape.” (source)

Seniors can do many different things to protect themselves from scams. They can work with financial planners to seek out the best legitimate lenders for their financial needs. They can make sure to look for HUD-approved loans. They can take classes in reverse mortgage loans in order to be well-informed about what's smart and what's not in this type of borrowing. And they can make sure to read the terms of their loans before signing anything. This type of self-protection helps to limit the impact of scammers and improve the state of reverse mortgage lending for all borrowers.

Question of the Day: What is the number one tool you would use to protect yourself from reverse mortgage scams?

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A new mortgage job board has opened up online to allow mortgage professionals to locate the employment that they are seeking. This provides a much-needed service to the mortgage industry which has laid off a significant number of people in recent years. This also provides an important service to borrowers who will benefit by having more qualified mortgage professionals applying to work with them.

The reverse mortgage industry has been one area of mortgage that is growing, rather than diminishing, in recent years. This means that many reverse mortgage professionals remain employed at their original jobs. However, new positions are opening up to meet the needs of this new type of borrower. These positions need to be filled and the job board will assist that in taking place.

The job market works with a basic supply-and-demand system. The more people there are seeking one job, the higher the competition is going to be. With a job board, more people become aware of existing jobs and therefore competition is increased. This means that each reverse mortgage specialist who obtains new employment is likely to be highly skilled in meeting the unique needs of these customers.

Question of the Day: What qualities are you hoping for in a reverse mortgage professional that you'll work with?

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