Reverse Mortgage News

It's been noted time and time again that it's never good to get a reverse mortgage loan that has been aggressively marketed to you. People who are too involved in the business of trying to sell you on a reverse mortgage are almost certainly concerned more with their own profits than with the benefit of the product to you. This doesn't mean that reverse mortgage home loans are a bad option or even that they aren't right for you. It just means that you need to look through the sales pitch to find the right kind of reverse mortgage loan situation for you.

It was noted in a recent article on the issue of reverse mortgage marketing that there seems to be an inverse correlation rule that applies to marketing of products. It basically says that the more that a product or service provider has to market to you to get you interested in what their selling, the less likely you are to truly benefit from the product. You should keep this in mind when reviewing reverse mortgage loans.

Those loans which are right for you are probably the ones that you go in search of, not the ones that are forecefully marketed at you by a potentially predatory lender. Ask lots of questions during the loan process and review the terms of your reverse mortgage loan carefully in order to get a loan that doesn't take you to the bank.

Question of the Day: What is the best recommendation that you have for someone seeking to protect him or herself from predatory reverse mortgage lending practices?

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There are many people who get reverse mortgage loans without realizing what they are getting into. Reputable lenders, the national government, senior organizations and some members of the media are working hard to make sure that seniors are aware of the pros and cons of reverse mortgage loans so that they can make informed decisions about getting this kind of home loan.

Unfortunately, there remain some borrowers who don't really think through their situation before getting a reverse mortgage loan and then they end up regretting the choice. This causes a bitter feeling and increases the likelihood that the general public will see the reverse mortgage loan as a bad thing. In reality the reverse mortgage can be a helpful means of accessing new income (just look at the many success stories that we've been able to report on here). But it requires that you know what you're getting into.

A recent news article recommending against the reverse mortgage loan summed it up with one turn of phrase. Writing about a woman who ended up regretting her reverse mortgage, the article's author said that the woman "jumped at the offer". When you're talking about hundreds of thousands of dollars in loan money, you shouldn't be jumping at anything. You should be carefully reviewing all of your financial options in order to make a wise decision.

The people who tend to be unhappy with their reverse mortgage loans are those people who didn't fully understand what they were getting into when they took out the loan. They are also often people who felt desperate for money and used the reverse mortgage income as a way to reduce that feeling. A decision based in logic is one that will likely not lead to regret.

Question of the Day: How long do you think you should take to review the reverse mortgage loan before agreeing to it?

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An article published earlier this week by The Press-Enterprise reported on two realtors who are joining forces to combat real estate fraud in their communities. One of the types of fraud that they find people in their community facing is reverse mortgage fraud. This refers to when a lender coerces a senior citizen into taking out a bad reverse mortgage without making sure that the senior is completely aware of the pros and cons and terms and benefits of the reverse mortgage loan.

The fact that these two realtors have come together in this effort speaks to a broader movement within the real estate, mortgage and lending communities. Many professionals are starting to realize that their industry is getting a bad rap because of a few bad apples that are issuing bad loans. Those people are starting to work together to make sure that the consumers they work with are informed enough to avoid those "bad apples" and still get good loans. In the case of reverse mortgages, there is legislation on the table to make these kind of improvements in the industry even more likely.

Question of the Day: What form of finance fraud concerns you most?

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There is so often only bad news to hear about reverse mortgage loans. In fact, the posts on the blog this week highlight the fact that there are a lot of problems in the reverse mortgage industry despite the fact that many professionals are working to improve the situation. However, that doesn't mean that all of the news is bad. There are plenty of times when the reverse mortgage home loan works the way that it's supposed to. The Broward Times recently reported on just such a case.

The report is about a woman who is pushing eighty years old and is struggling financially. She has 5 children, 15 grandchildren and 30 great grandchildren. She loves when they can come visit her in the old family home. But she wasn't able to afford the insurance and taxes on that home and she wasn't able to keep it in a good state of repair. The reverse mortgage loan helped. She gets a steady income from the reverse mortgage which lets her keep the house and fix it up to make it safer and more comfortable to live in.

When this woman moves or passes away, her children can decide whether or not they want to pay what's left on the reverse mortgage loan. (Let's say that over the years, this woman accesses $20,000 in cash on the home loan. This is the amount the family would owe if they want the house.) In the meantime, Mom/Grandma gets to live comfortably in the house. Everyone basically benefits.

Question of the Day: Can you share a reverse mortgage success story?

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Perhaps you've head the buzz about Kindle: Amazon's New Wireless Reading Device, the reading product released by Amazon last year. It's a wireless device that lets you read books on what's basically a small computer screen. You can order books through Amazon to be delivered directly to your Kindle Reader. This means that you can read whatever you want no matter where you are.

For seniors who travel a lot, Kindle can be a great way to keep up on reading even though you're jetting around the world. And for seniors that are looking to fund their travels, the reverse mortgage might be something that's at the forefront of their minds. It's no surprise then to find out that there are indeed reading options available on the Kindle.

For example, Kindle readers can get a copy of The Reverse Mortgage Advantage : The Tax-Free, House Rich Way to Retire Wealthy! send to their device. This book provides information about using the reverse mortgage to really access some wealth. The traveling senior may be particularly interested in that kind of information.

Question of the Day: Would you do reverse mortgage reading on Kindle?

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We always talk about how important it is for consumers to arm themselves with information about the reverse mortgage loan. Seniors who are considering getting a reverse mortgage need to make sure that the fully understand both the benefits and the consequences of the home loan. However, borrowers are not the only ones in the reverse mortgage deal who need to get an education.

Lenders also need to make sure that they have a full understanding of the reverse mortgage so that they can provide their customers with the information that is being sought out. Reverse mortgage lending differs significantly from other types of mortgages and therefore requires that the lender learn many different things from what they might have learned in school about mortgages.

One place where lenders might get this kind of education is through the company that they work for. One example of this is Lender Lead Solutions which is a company that operates its own school (Lender Lead Solutions University) designed specifically to teach their lenders about the ins and outs of things like the reverse mortgage. They offer courses that are specific to the basic reverse mortgage home loan and also offer classes about dealing with the reverse mortgage lending process.

It's important that the lenders that you work with are educated in the areas of lending that they are working with you on. It's also important that you get smart financial advice from a third party who doesn't have a vested interest in your acquisition of the home mortgage loan. Working with high-quality professionals can help you to make sure that your reverse mortgage loan works better for you.

Question of the Day: What type of classes do you think reverse mortgage lenders should be required to take?

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There is an opinion article today in the Ventura County Star which was written by a finance professional working in the reverse mortgage loan business. This professional discusses the fact that many seniors are losing their homes due to the foreclosure problems that are currently plaguing the nation. More importantly, the finance expert goes into depth in explaining the way that a reverse mortgage can assist the situation.

Some of the points that the professional highlights are worth mentioning again:

- Reverse mortgage loans are on the rise and that's because they work!

- The reverse mortgage aspect of lending is one of the most highly regulated areas of lending available today. This means that there's an increased level of security when taking out this type of loan in comparison with the other types of loans that you don't even think twice about taking out.

- Social security benefits and Medicare benefits are not impacted by receiving the reverse mortgage home loan. Many seniors think that they're going to lose these things when they get a new source of income but that's not the case if the income is your home equity.

It is also pointed out in this article that the biggest barrier to the success of the reverse mortgage loan is the fear of seniors associated with getting this type of financial help. Because of all of the negative media surrounding the reverse mortgage, many people won't even review this as an option for financing their homes and their lives after retirement.

The reverse mortgage loan isn't right for everyone. However, when you're facing the loss of your home because of a foreclosure or because your retirement income doesn't cover the expense of maintaining your home, you might want to more carefully consider options such as these.

Question of the Day: What holds you back from getting a reverse mortgage loan?

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Credit card debt is always something that's difficult to deal with. Those evil credit card companies lure you in with low interest rates and then trap you with rate increases and fees. But as a person who is working full-time, it's usually possible to figure out ways to pay back that credit card debt that you accumulate. Unfortunately, the same is not true for the retirement population.

If you enter retirement and still have credit card debt, it's highly unlikely that you are going to be able to ever pay it off. Retirement income is just too limited to allow you to pay off those additional financial burdens. In worst case scenarios, people enter retirement only to discover that they can't even meet their minimum monthly payments. This places a strain on the individual that can ultimately cause stress-related health problems and decrease the aging individual's quality of life.

The reverse home mortgage is an important option to consider for taking care of this problem. You can get a lump sum payment that will allow you to pay off that credit card debt so that you're no longer taxing all of your retirement income on making those payments. You can rest easy knowing that you've used a loan that makes more sense than those high-interest credit cards and that you're taking steps to make sure that the final quarter of your life is going to be stable and secure.

Of course, if you are pre-retirement, you might want to think about other options for paying off those credit cards. Some people may find it beneficial to do some smart financial planning and work for an extra year to pay off those cards in order to prevent the need for using a reverse mortgage to make the payment. This frees up the reverse mortgage for future emergencies or even for some more fun expenses down the line.

Question of the Day: What other loans would you consider paying off with a reverse mortgage loan?

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One of the biggest myths about the reverse mortgage loan is that it means you are signing over your home to the bank. That's not true at all; the home stays in your name and remains your property until you choose to move or ultimately pass away. For most people considering a reverse home mortgage, this information is a relief. However, there is also a negative aspect of this that you should take into consideration.

As was pointed out in a recent article covering the pros and cons of reverse mortgage loans, this fact means that you are the one that remains responsible for your home. The property taxes that are owed each year are your responsibility. The insurance that is required to keep the home safe is up to you to purchase and pay for. The homeowner's fees that are associated with your area or neighborhood must still be paid by you. It was also noted in that article that your failure to continue to keep up these payments could ultimately mean the loss of the reverse mortgage loan or even the loss of the home.

Ultimately, it's a good thing that you're not giving away your home when you take out a reverse mortgage loan. And you can even use money from the home to pay for these types of fees which can relieve a great financial burden to many homeowners. But you do need to bear in mind that this means that you continue to have responsibility for your home and that you need to take that responsibility seriously.

Question of the Day: What other home owner responsibilities can you think of which don't go away just because you get reverse mortgage home loan assistance?

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Doing taxes is never something that is particularly fun. It's made increasingly difficult when you enter retirement and yet still have income coming in from a variety of sources. You don't just get those simple W2s anymore and you have to figure out a whole new way of doing taxes. People who receive money from loans, particularly the reverse mortgage loan, have a lot of trouble figuring out how to include that money in their tax information and what it means for deducting expenses from their house.

There are many different aspects to mortgages and taxes but the main thing that you should know is that any income that you receive as a result of a reverse mortgage loan is not income that is taxable. You do not have to include that in your tax reporting in terms of income that you have gained.

Where difficulty comes in is if you've made any repairs to the home using the reverse mortgage loan. Many people get a reverse mortgage loan on a residence that is their primary residence. Hoewver, they may spend a few months of the year traveling once they are retired and may rent out that house during that time. If so, the income from the rental period is taxable income. And the repairs may be deducted as a result of the fact that the improvements are done to a property that you do rent out.

The best thing that you can do for yourself during this time is to work with a finance professional who is knowledgeable about tax issues. This person can assist you in figuring out what does and doesn't need to be included on your taxes in terms of the home that has a reverse mortgage loan associated with it. Your lender should also be able to answer some basic questions about this issue.

Question of the Day: Would you still get a reverse mortgage loan if it was taxable income?

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Economic predictions are being made in India which hinge on the growth of the reverse mortgage there. It is believed that the potential of the reverse mortgage market in the country will triple over the course of the next seven years.

At the current time, the market potential for reverse mortgages in India is just shy of $40 billion. That's a nice chunk of change. However it's nothing compared to the $113 billion that the market is predicted to reach in 2015.

The reason that the market is expected to grow so much during that time is because a significant number of senior citizens are going to be entering retirement age which is when it becomes possible to access the reverse mortgage loan.

The implication for this prediction is that there is a wide market for reverse mortgage lenders to tap into in India. However it is unclear whether the market in India is equipped to deal with this potential. Changes will have to be put in place in the economy to make the access to this money a reality for India's seniors.

Question of the Day: Do you believe that the U.S. reverse mortgage market is more or less stable than the market in India?

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A couple of months ago we reported on a new reverse mortgage alternative called REX. Based out of San Francisco, this is less of a lending program than a partnership housing investment. We haven't heard a lot about it since it was first launched but a news report this week in the Chicago Sun-Times has taken a closer look at what it's all about.

As described by the Chicago Sun-Times, it basically works like this: You agree to a partnership in owning your home and then haev to split the percentage of the home sale price with the company. The benefit to you is that you don't have to sell your house any time soon and you'll get an upfront chunk of money right now. You're effectively giving away half of the value of your house but you get some of that money right now and can still remain in your home.

The article in the Chicago Sun-Times focuses on the negative aspects of this. Basically, it's saying that you don't want to give up half the value of your home if you can help it. That's true, but it's something to consider if you're going to have to give up the home now anyway because of the financial difficulty of keeping up with payments. You may find that you prefer the option of staying in your home using the lump sum payment and still getting half of the home's sale value when you move out.

This is not the same as the reverse mortgage. Instead, it's an alternative option for people who don't think that the reverse mortgage is right for them. The main benefit is that you can get a chunk of your home's value back when you sell it. And there are no upfront costs to you like there are with a reverse mortgage. However, it's not the right choice for everyone. Like with reverse mortgages, you should get the full scoop from the lender and have the deal reviewed by a finance professional before moving forward.

Question of the Day: Would you prefer the REX loan or the reverse mortgage loan?

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The Financial Industry Regulatory Authority (FINRA) has issued a warning to seniors that they should carefully weigh their options before proceeding with a reverse mortgage loan. The suggestions that they make for seniors seem to be basic common sense warnings which all borrowers should be keeping in mind. However, this warning is important because it's a step forward in the process of trying to make reverse mortgage lending safer for the seniors that are interested in taking advantage of the loans.

The main thing that FINRA points out is that the reverse mortgage loan is not the smartest choice for the homeowner that is interested in using their real estate as an investment. This is true. The reverse mortgage is instead designed for those people who are struggling financially and are at risk of losing their homes because of the cost. Rather than an investment, the reverse mortgage is intended as a way to assist people in maintaining their current lifestyle despite lowered income (due to retirement) and rising expenses (due to inflation).

Some people in the world of investment have cited concerns about the timing of the FINRA warning. They believe that the warning is a response to a recent New York Times article which may have mistakenly suggested that the reverse mortgage could be a good housing investment. In other words, it's a way to protect investors.

The bottom line is that the reverse mortgage loan is a serious loan. It's about your home and your money. That means that you should take it seriously and know all of the terms before you move forward with the loan. A financial advisor with experience in real estate investments can assist you in determining specifically how the loan might work for or against you.

Question of the Day: What do you believe is the ultimate purpose of the FINRA reverse mortgage warning?

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Much of the news that we hear about reverse mortgages is related to the debate about whether or not they are right for seniors. (Of course, the truth is that they are right for some seniors and not for others, depending on the individual's financial situation.) But not everything related to reverse mortgage is controversial.

Sometimes it's good to go back to the basics and review just what the reverse mortgage is all about. For example, let's take a look at the the things that people commonly do with the money they get from a reverse mortgage loan:

- Pay for basic monthly expenses. Life after retirement gets expensive so seniors use the reverse mortgage loan as a way to pay for their daily expenses.

- Keep their homes. The reverse mortgage eliminates the monthly mortgage payment and can also be used to pay for property taxes and other home expenses.

- Make repairs to the home. Houses deteriorate over time; the reverse mortgage can be taken in a lump sum to renovate the house.

- Pay off other debt. The terms of the reverse mortgage are more favorable than credit card debt and other types of loans so the money can be used to pay off that other bad debt.

- Travel. If you always thought that you'd travel after retirement, the reverse mortgage loan can help you do it.

- Investment. Some people use the reverse mortgage as a form of housing investment.

Of course, you can do anything at all that you want to do with the money that you get from your own reverse mortgage but these are the most common things that people are doing. Speak with a financial advisor if you need assistance determining how to budget and spend your reverse mortgage monies.

Question of the Day: What would you use a reverse mortgage payment for?

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We always talk about how the reverse mortgage is designed to assist the elderly population. Sometimes we mention the fact that the baby boomer generation is aging and that its oldest members are starting to look at reverse mortgage loans. But a recent news column pointed out that there's another generation which might benefit from the reverse mortgage loan industry: The Sandwich Generation.

This term refers to those people who are middle-aged at the current time (and most likely are part of the baby boomer generation). More specifically, they are at an age where they have children of their own that they might still be supporting financially - primarily by paying for college tuition. They also have parents who are old enough to need some financial assistance from them. That leaves them in the middle of this financial sandwich.

The reverse mortgage loan goes to the aging parent, of course. However, it can be a way to relieve the financial burden on the Sandwich Generation member. This individual doesn't have to help a parent pay for their home. They also don't have to put the parent up in their own homes and support them that way. Instead, they assist the parent in getting the reverse mortgage loan so that they can effectively continue to support themselves in terms of their daily living.

Question of the Day: Is the reverse mortgage a smart choice for the sandwich generation?

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Because of the growing popularity of the reverse mortgages, many different businesses and government institutions have been looking at alternatives that they can offer to seniors. For example, the REX version of the reverse mortgage is of growing interest to seniors who are seeking a way to take out money against their home's value.

For some seniors, the problem isn't that they want more money but rather that they don't want to have to pay out so much each year. They get the reverse mortgage in order to have the income to cover the costs of property taxes, home remodeling and other expenses associated with owning a home. Their preference would be to not have those payments at all so that there would be no need to take out a reverse mortgage loan.

In response to this issue, some city governments have created a system of deferred property taxes for seniors. The payment gets postponed indefinitely. However, when the senior wants to sell the home (or passes away and the family sells the home) all of those taxes must be paid back.

Some seniors say that the reverse mortgage is a preferable option. That's because it's possible to defer taxes so much that you end up owing more than the value of the home itself. With the reverse mortgage, you can only tap out your home equity.

Learn more about this issue here.

Question of the Day: Would you be interested in a deferred property tax to replace the reverse mortgage option?

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There was an interesting idea proposed in a recent article about reverse mortgages. The article in full is about the fact that the economic market is not great right now and it's not a good idea to take out risky investments. It encourages people entering retirement to get rid of their risky invetsments and take on ones that are less risky. And it mentions the reverse mortgage as a way to get some money now in order to invest in those low-risk things (like putting money into a money market account).

The idea mentioned in the article is that you can take out a new full term life insurance policy in order to cover the financial risks that you take when you take out a reverse mortgage. Essentially the reverse mortgage is a home equity loan that gives you money back that you've already paid into on your home's value. The concern for many borrowers is that the loan has to be repaid when the home is sold. This means that if the borrower passes away and the family can't afford to repay that loan, they can't keep the home.

The idea with the life insurance policy is that you use some of the reverse mortgage money now to take out life insurance. Then when you die, the life insurance goes to the beneficiary. The beneficiary can then use the money to pay for the home so that you haven't taken anything away from your heirs. Interesting idea.

Question of the Day: What is your take on the idea of an insurance solution to this reverse mortgage issue?

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Retirement is a time of huge transition in a person's life. You've been a working person for so long that your career probably defines much of who you are. Making the change to being retired can result in some emotional ups and downs, adjustments in your relationships and a little bit of fear about what's going on. This fear is exacerbated by the very real fact that your income goes down considerably when you retire but your expenses may remain the same.

A recent review of the gift book “Your Little Legal Companion: Helpful Advice for Life’s Big Events" discusses the many different issues that come up during this transition and offers advice on how to resolve them. For example, you may get bored and lonely and can cure this by volunteering somewhere.

One of the problems cited is a sense of panic about your financial situation. This is common among seniors today who are living in an uncertain economy with rising expenses. There are several solutions mentioned to this problem, one of which is the reverse mortgage loan. With a reverse mortgage, you gain the knowledge that you can remain in your house and still get some economic assistance from your home equity.

Question of the Day: What is the biggest fear facing you regarding retirement?

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If you listen to National Public Radio then you might have caught a short segment last weekend about the issue of reverse mortgages. Liane Hansen of NPR spoke with people who work in the field of reverse mortgage lending as well as with people who have been victimized by predatory reverse mortgage lenders.

This report revealed useful information about how to protect yourself from bad reverse mortgages. One of the most helpful pieces of information is to be wary of any lender who is advertising himself or herself as a specialist in senior issues. This tends to be a way for bad lenders to get the attention of vulnerable retirees.

"Some salespeople earn the trust of seniors by calling themselves "registered financial gerontologists" or certified senior advisers."

As always, it's important to be cautious about who you work with when getting a reverse mortgage loan. The regulations are strengthening on these lenders and it's getting safer to obtain these loans but you still want to ask a lot of questions to be sure that you're working with someone who has your best interests at heart.

Listen to the NPR report here.

Question of the Day: What other keywords would you stay away from when looking at reverse mortgage lenders?

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The reverse mortgage industry is constantly looking for ways to make lending safer and more efficient for the seniors who are interested in obtaining this type of home equity loan. Both independent lenders and national organizations have a vested interest in attempting to increase the safety of the reverse mortgage loan process. One of the most recent industry efforts attempting to achieve this goal is the creation of an organization called the National Housing Counseling Association (NHCA).

"NHCA will act as an independent organization to support HUD-approved 501(c)(3) housing counseling agencies in the delivery of reverse mortgage counseling services. Its principle goal is to support education initiatives and provide resources to improve the operational efficiency, consistency and financial sustainability of reverse mortgage counseling programs nationwide."

The focus of the new organization is to make sure that high-quality truthful reverse mortgage counseling is widely available to the seniors interested in getting a reverse mortgage loan. Counseling is already required as a part of the HUD reverse mortgage loan process but it is important to make more useful counseling available to all reverse mortgage borrowers.

Question of the Day: What role do you think organizations like NHCA have in the reverse mortgage lending business?

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As interest in reverse mortgage home loans grows, more and more people are expressing a need for services that teach them the basics of what these senior loans are all about. As a result, many local business people across the nation are setting up reverse mortgage seminars to provide the information that potential borrowers are seeking.

Take a look at the local newspaper calendars on any given day and you're likely to see one of these seminars listed. For example, let's look at three different newspaper listing from yesterday:

1. The business calendar from the The Chico Enterprise-Record in California lists a free ninety minute reverse mortgage seminar being held at a local bank.

2. The business calendar from The Columbian in Washington state lists an almost identical bank-based free seminar but notes that it will be hosted by a "Reverse Mortgage Specialist".

3. The "seniors' calendar" from Free Lance-Star in Virginia lists a reverse mortgage seminar at the Stafford County Public Safety Center.

These are just a few examples from one particular day in the news. There are many more events like this taking place around the United States to bring reverse mortgage information to the future borrowers who need it.

Question of the Day: Would you attend a free reverse mortgage seminar in your area?

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