June 2015

Senior Divorce

In my previous post, I mentioned how much more frequent it is for people over age 65 to divorce.   In spite of the national average being down, older Americans are divorcing at a much higher rate than they did in the past.

It’s difficult and painful enough to go through any divorce, regardless of your age, but I can’t imagine how much more complicated and painful it can be when you have been married for many years. Depending on the property agreement between the parties and if anyone is going to remain in the home, funds from a Reverse loan can be used to buy out the other party.

Here is the remainder of the article by Anita Gumm, Esq. about “Premarital Bliss”.   See my previous post for the first part of it.

Anita Gumm



“Also, a party may want to preserve his or her estate for his or her heirs, free of the other party’s inheritance claims.  Premarital agreements may validly provide that the earning and accumulations of each party’s separate property, free of any claims, community property or otherwise, of the other party.

Agreements fixing or saving child support are invalid.   However, spousal support may be waived or fixed in an agreement so long as the agreement is ‘fair and equitable’.  The parties may determine ownership rights and disposition of death benefits from a life insurance policy in an agreement along with their property rights.

Each party must fully disclose all of their assets and debts in the agreement otherwise a court could find the premarital agreement unenforceable.”



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Senior Divorce

Although the national average for divorce has come down over the years, it has actually increased in seniors.    Sometimes it’s referred to as Gray Divorce in the obvious reference to “older” adults.

It seems unimaginable that after being married for many, may years, sometimes for 50 years or more, that anyone would get a divorce at that time in their life.    But it is occurring more often than you would think it would.

When it comes to the property settlement and if it’s agreed that one of the individuals will buy out the other and remain in the home, they can use a Reverse loan to accomplish the refinance and not have to worry about qualifying for a traditional loan using their income and credit or be burdened with a mortgage payment when they are most likely on a fixed income.

I recently met with Anita Gumm, Esq. a Divorce attorney for many years and we discussed this unusual situation and “late in life” divorces.   She provided me with an article that she wrote which I share in this post.

“Premartial Bliss”

Anita Gumm, Esq.



” A ‘premarital’ ( or ‘antenupial’) agreement is a contract executed between prospective spouses in contemplation of marriage, fixing marital property rights and financial responsibilities upon consummation of the marriage.

The motivation in executing a premarital agreement is typically intended to foster or perpetuate conditions which will help preserve a forthcoming marriage.  Premarital agreements are favored by the courts provided they are freely entered into by the parties with no deception, duress or undue influence.

The parties intent in executing a premarital agreement is to avoid or alter the applicability of community property law to assets already owned by each party and to property and income to be acquired during the marriage.”

I will publish the remainder of her article in a following post.


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Forbes Magazine Discusses Care Giving and Reverse Mortgage

Although the original article that was published in Forbes Magazine on June 16th, is quite lengthy, essentially it discusses the “real” cost to the family who is desperately trying to help their senior parents age in place, but are struggling to maintain their own daily life, such as their profession and their family ( especially if their are younger children living at home), their own expenses and on top of this, they may be using their own retirement funds to cover the costs associated with their parent’s care.

Here is the rest of the article.

Forbes: Reverse Mortgage Can Help With Planning for Aging Parents
Posted ByElizabeth Ecker On June 16, 2015 @ 2:01 pm In News,Reverse Mortgage | No

“Your financial well being and retirement security is often tied to your family, especially your children and parents,” the column notes. “So, what can you do to reduce the impact on your own retirement? First, have a discussion with your parents about a long-term care plan. This might include long-term care insurance, purchasing an annuity to help provide income, considering a reverse mortgage to pay for care, or moving into a continuing care retirement community.”

Whatever the solution, communication is key, Hopkins concludes.

“In some cases, just having the discussion can be an important step to setting up a plan for care in the event that the parent needs help. It is much better to be proactive in this area and have the discussion when the parent is still in good health and mental standing. Far too many people wait until the care is needed and end up scrambling for help.”

I cannot stress enough the value and peace of mind that a Reverse loan can provide in this situation.   Why not use the equity the parent’s have in their home to provide them with the ability to stay in it and remove the burden to their adult children who are doing their best with juggling their own lives and taking care of their parents at the same time?

Costs have come down on the HECM loan and there are many more options available than there were in the past.

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Forbes Magazine and Planning for Aging Parents

Forbes magazine published and article on June 16th. about the looming issue of having to take care of aging parents who may have not prepared for their older years.   They may not have enough funds saved and invested to last the rest of their lifetimes and it is falling on their adult children to  manage their care and in many cases, financially supporting them.

This has the potential to be very, very stressful for the family and there is the constant worry of running out of money, not to mention the cost of emotional and physical health to the caregivers.

This is a very serious and real crisis that it just beginning to unfold.   The Forbes article was condensed into a shorter version to read and I am sharing below.

Forbes: Reverse Mortgage Can Help With Planning for Aging Parents
Posted ByElizabeth EckerOn June 16, 2015 @ 2:01 pm In News,Reverse Mortgage | No Comments

“Aging parents can be a major retirement risk even to those who are seemingly on track in preparing for their later years. The care for aging parents can be an additional consideration to supporting children, and can come with new burdens, both financial and emotional, Forbes columnist Jamie Hopkins writes this week.

Among major challenges associated with aging parents are time, cost, work and health, Hopkins writes. Caregiving can be time consuming and expensive. Plus, work-life balance can be difficult, or impossible, and the health of the caregiver is a major factor that many families are not prepared for.

One of the potential solutions addressed by the column: a reverse mortgage.”

I will post the remainder of this summery in a following post.


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“Financial Assessments” for Reverse Loans

Okay, the dreaded FA went into effect on April 27, 2015 for all Reverse loans originated as of that date and thereafter.   Ummm, so what does this mean to a possible borrower?

Do they have to qualify for the Reverse loan using FICO scores and income ratios?  Is is going to be much more difficult to qualify for the FHA loan?

“NO”.   It won’t.   Anyone over age 62 and occupying their home will still be approved.   However, more documentation will have to be collected by the Loan Officer when a potential borrower is applying for the loan.

Yes, I know.  It’s a hassle and everyone hates paperwork.

Essentially, the borrowers’s cash flow VS housing obligations, credit card debt and any installment loans and monthly utilities will be subtracted from the borrower’s income.

And when the “dust settles”, if a couple living on the West Coast nets $998.00 after all expenses have been deducted from their income, then they won’t have to have an escrow account set up to pay future property taxes and homeowners insurance.

However, if they fall under that   (what I consider a small number), and they have cash reserves such as a Savings or retirement funds and have never been late paying their property taxes or Home Owners’ insurance,  then they will not be obligated to have funds set aside from the money they would receive from their Reverse loan.

So, going forward, all of this means that the borrower has to provide income documentation and any bank, investment or retirement statements to show their cash reserves.

In the end, it’s just going to take a bit longer to copy everything and then have an Underwriter “doodle” around with the calculations,  before giving final approval to the transaction.

In the 14 years that I have been helping people apply for the Reverse loan, I frankly can’t think of anyone that would have not qualified for it under these new guidelines.   My personal opinion, is that my future clients will be just fine and sail through the process.

I will give them a list of the necessary documentation they will need when I first meet with them for their consultation.  Then when I return with their loan application, I will simply pick everything up at that time.

Due to the fact that I have been in Lending over 30 years and I have a great deal of experience documenting income and reserves for traditional mortgages,  this is a “no brainer” for me.  And I will always make every effort to make it easy and comfortable for my clients, too.

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