financial security for seniors
More on “Kosher” Reverse Mortgages
Okay, so if you read the previous post, you are getting the idea behind Jack Guttentag’s suggestion, that somehow a certification be created that would label Reverse loans as “safe” for the consumer.
Jack Guttentag is known as The Mortgage Professor and has written a number of articles supporting the use of Reverse loans for retirement planning and covering the costs of aging in place.
This is a unique vision that he has suggested on how to improve the understanding of how Reverse loans function and especially why they should be considered safe and an option to fund longevity. After all, most people have not planned for future medical expenses and in many situations, will potentially outlive their financial resources.
Here is the remaining part of the summary, discussing his point of view.
“A kosher HECM, Guttentag writes, would be a transparent loan that doesn’t have unanticipated surprises down the road that could make the borrower regret taking out a HECM.
Among other features, the set of options for drawing funds would be the best of those available to the senior; the combination of interest rate and upfront settlement costs also would be the best available; and the final price set on the lock date would be immune to manipulation.
The product would be offered by kosher HECM loan advisers, much like a kosher butcher would sell kosher meat. These advisers would stress the importance of long-range planning, counter to the common senior bias toward excessive cash withdrawals, the article states.
Kosher loan advisers would also develop and demonstrate a unique plan for each applicant, providing price transparency and lock-price integrity.
It follows, then, that a kosher HECM system would provide full disclosure of the product’s features, giving seniors upfront comparisons of prices and available options.”
Written by Emily Study