the truth about reverse loans

Is a Reverse Mortgage a Scam?

For many years the Reverse loan had a image problem and prior to them being placed under the auspices of HUD and FHA, they were quite terrible.   Generally the client had to buy an annuity with the funds they received and also share their equity with the “lender” and thus the terrible reputation of the loan was created.

But that is no longer true and hasn’t been the case for many years, however the image continues to linger and quite often there is a credibility problem that professionals such as myself, have to address with a potential client in regards to “what they have heard” about Reverse loans.

None of us like to be “sold” anything and we certainly need to feel comfortable with our decision when it involves something as serious as a mortgage.  And due to the confusing aspects of the loan it makes it quite challenging to explain it to someone that is considering using the option, because they may need additional funds for cost of living expenses, home improvement or leveraging a retirement saving   ( and did I say?), unplanned medical expenses.

See what my clients are saying!

And there is high percentage of seniors that are carrying a mortgage burden and making mortgage payments each month on what may now be a “fixed income” and are no longer employed and might be drawing down on their retirement fund  each month to pay this ongoing obligation.

The question for those of us in the industry, is how to best address the fears and concerns about the loan and also to transcend the mistrust and doubt as to whether or not they are some sort of scam.   A scam to take over the borrower’s home and then “kick them out”.

This conversation will continue in a following post.

Stayed “tuned”.


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Reverse Mortgage Consultation and Meeting Sylvia

In my last post I mentioned that I would start to share some of my clients’ reasons for applying for a Reverse loan and I think I will start out with one of my earliest clients, Sylvia K.

Needless to say, I will not be sharing their actual names due their right to privacy.

Sylvia was in her early 80’s and a widow for a number of years, but did not have enough income from her Social Security to meet her monthly expenses and she had run up large balances on her credit cards to pay them and now found herself without funds to make the payments and still have money for her utilities and food.

I remember meeting her on a very hot summer day in her home and all the windows where covered up in heavy drapes and it was dark inside and she didn’t have any air conditioning and sweat was running down my spine.

Oh yes….it was “hot” in her home.

A trusted friend and neighbor  ( Brenda) was also there, much to my relief because Sylvia was a tough New Yorker and she of course didn’t trust me.

Why should she?   She didn’t know me and I was to be treated with great suspicion.

Anyway, it was hotter then Hell in her living room as she “grilled’ me about Reverse loans and made sure that I knew she was one, smart gal and had been in the clothing industry in New York, a “professional” and couldn’t be taken advantage of.

And she was scared as well.   Here she was, in her 80’s and out of money.  And I really liked her feisty attitude and her three cats, too.

( After she passed away about two years later, I found out about the feral cat colony she was feeding in her back yard).

Brenda asked me questions about the FHA loan, gently encouraged Sylvia to be “nice” to me.   ( And here’s the interesting part.  Sylvia and I became friends and she used to send me cute note cards to my home address, telling me how she was doing and included the names of her three cats in her signature).

And “yes” she did her Reverse mortgage.

She received a Line-of-Credit, paid off the credit cards and had a comfortable amount of money leftover to use whenever she needed it for anything.

She called me one year after she had celebrated her birthday in Hawaii, just to chat with me and tell me all about the two Birthday parties she had, had  and mentioned she wasn’t feeling too well.   I said that she probably had “partied’ too much.

But as it turned out, I was the last person she spoke to as she quietly died later that morning at home in her bed and her neighbor Brenda  ( Who checked up on Sylvia every day) called me and let me know that Sylvia had passed away.

And as I like to say “she lived life on her terms”and I was the last person she spoke to and I like to think that in the “end” she trusted me.


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Reverse Loans are Bad, Aren’t They?

There was an interesting column that was written recently in Forbes that questioned why more seniors aren’t researching the benefits of using a reverse mortgage to extend their retirement funds.

I of course, have the answer.

It’s fear and the unwillingness to even speak over the telephone with a qualified Reverse loan consultant.   I know, because I speak from experience.

The general public, professionals and the media that continues to churn out inaccurate stories of someone’s bad experience with the loan, is driving a mindless and inappropriate fear about them.

And this idiocy and ignorance is hurting the senior community, because they don’t know what to believe and because of “what they have heard”, they have an opinion that is solely based on hearsay and inaccurate portrayals of the Federal loan program.

The home is the biggest asset anyone has and for a senior, it can be used to help them extend any savings or retirement funds further into the future and pay for medical and caregiving expenses.

Using a reverse loan in lieu of drawing down on any savings or investments, is a smart decision.

Currently, people over age 62 retain $4.08 trillion in home equity.   Yes, you read that and it’s a huge number, isn’t it?

But people get weird and defensive when you mention “reverse mortgage”, because of the bad things that they have heard about it

“The biggest hindrance: long-held misconceptions and miseducation of the reverse mortgage product in the eyes of the consumers”.  Forbes

I have been a Reverse loan consultant for almost 14 years and it has been a continual struggle to develop consistent business because of the incessant, negative pounding that doesn’t stop.

However, I do feel that it has become less of an issue and there is more positive press than in the past, as professionals and the general public are becoming educated about why this is such a great retirement tool and a positive experience.

Costs have been reduced   ( That was always a BIG objection) and with the new Financial Assessment in place, they are safer than ever.

And in closing, it may not be appropriate for everyone, but it’s great to have it as an option, wouldn’t you agree?

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Reverse Loan Consultant