Reverse Mortgages & Financial Planners
In the previous post, I mentioned how difficult it has been for me to speak with Financial planners or Advisors about Reverse Mortgages. As I noted before, even though I was a member of their trade association, NAIFA & supported a local chapter, they would not give me an opportunity to educated them on how the FHA Reverse loan program could benefit their senior clients and frankly, increase their professional image.
Everyone was polite but not interested in what I had to share.
That is finally beginning to change and I’m quite relieved about it, because if a senior or the adult child of a senior is relying on a Financial Advisors guidance in this decision, sadly they may discourage them from considering the Reverse loan as a resource for additional tax-free income.
Here is the remaining article from Reverse Mortgage Daily:
FINANCIAL PLANNERS CONSIDER REVERSE MORTGAGES NOW BEFORE INDUSTRY CHANGES
“While reverse mortgages are most commonly taken out by low- to middle-income seniors, they’re growing in appeal among other demographics, too, said one certified financial planner, noting a trend of more affluent people using the product as a planning tool to fund long-term care and supplemental life insurance.
“Their investments have taken a big hit, and if they have needs that have to be addressed, they’re looking to their house to fund it,” said Dennis Loxton, regional vice president of the reverse mortgage division of First Century Bank in Gainesville, Ga., in the article.
The exits of big-name lenders such as Wells Fargo and Bank of America also makes the future of the program unclear, it continues, going on to mention several industry lawsuits including deceptive marketing charges and allegations of illegal foreclosure procedures against spouses of deceased borrowers.
“While these headwinds are unlikely to cause the reverse mortgage industry to disappear, in the short run they will probably have a negative impact,” says Financial Planner, going on to predict the possibility of consolidation among bigger players, tighter underwriting standards, and higher fees.
The article also explains how the program works and runs through the pros and cons of reverse mortgages.”
Over the past ten years since I have been specialized in the FHA Reverse loan program, I have done my best to educated Financial planners about the benefits to the senior clients or to their clients who have senior parents.
They have been, very, very resistant to the idea, due to a total lack of understanding about the loan and they have cultivated a bias against it due to a lack of education about how it works the pros, the cons and how it could elevate their image to their clients as a “trusted advisor”.
It seems that this is all about to change. Following is an article from Reverse Mortgage Daily that I will share in two parts.
Financial Planners Consider Reverse Mortgages Now Before Industry Changes
“Despite some industry headwinds, now may be just the right time for financial advisors to recommend reverse mortgages to clients to help fund retirement and lock in home values and claim amounts, says a recent article by the online industry website Financial Planning.
If a reverse mortgage makes sense for a financial planner’s clients, it’s a good idea to look into them soon, and for several reasons, Financial Planning advises.
These reasons include the possibility that the Department of Housing and Urban Development (HUD) could decrease loan limits at the end of 2011 from $625,500 to $417,000. Also, an FHA-insured reverse mortgage is a way to lock in a home’s current value and protect its equity, as housing prices in some parts of the country continue to decline.
And, for pre-retirees who have lost their jobs and are struggling to find work in a weak economy, the loan could be a “financial lifeline,” says the article.”
I will provide the rest of this article in tomorrow’s post.