Cautious is defined as showing or using caution; a warning or having alertness or taking care in a situation. Therefore I feel you should be cautious of the food you are putting in your mouth, the medications you are taking, the safety of the products you purchase, the credit card you are applying for, how you are spending your money, answering the door when you weren’t expecting anyone, purchasing services from the person going door-to-door, the car you are purchasing, the home you are buying. Should you be cautious of reverse mortgages? Of course you should be cautious of reverse mortgages. But you also need to be cautious of who you are getting your reverse mortgage information.
State Attorney Generals, politicians and other government agencies are issuing cautions on reverse mortgages. Some of their advice is good, unfortunately, with many of these “warnings” the information is not accurate. Their advice that one should get information and have an understanding the product and it’s pros and cons is good advice… just as you should for any product or service. Unfortunately one government agency, the Consumer Financial Protections Bureau (CFBP) didn’t even talk with borrowers to write their report, therefore their report is not based on actual circumstances and discredits the quality of their information.
Senior advocacy groups also offer their cautions on reverse mortgages without having facts or experience with these unique products. Their opinions include that reverse mortgages should be used as a last resort; should only be for older seniors; are for the cash poor, not for those planning for long-term care. In my years of specializing in reverse mortgages (since 1999) I have found that these are misguided cautions. Everyone’s situation is different, so assumptions should not be made and generalized for all situations.
The reverse mortgage should not necessarily be a last resort; can benefit those 62 as well as those 82 or 92; those needing a better cash flow because their home is their only asset or those who want to protect some of their assets for their long-term care planning purposes. Rather than being an advocate, cautions of these sorts are really a disservice because they scare people rather than encourage them to get the facts and allow seniors to make their own decisions.
On a news talk show recently they were discussing reverse mortgages with a financial advisor who was being portrayed as a reverse mortgage expert. As I listened to the interview I was astounded by the inaccurate information provided by this so-called “expert.” Being financial advisors are not allowed to offer reverse mortgages, they are not the reverse mortgage specialists or the experts so they don’t have all the facts. They have their areas of specialties, as reverse mortgage specialists, we have ours. At the end of this interview an 800 number was provided with the statement that this was the HUD number to be call to get more information. I didn’t get the number written down so I don’t know whether this was a number to HUD or not. What really made my jaw drop was the interviewer’s statement that one shouldn’t need to call the number because they just heard all the “facts” from “Mr. Financial Advisor.” Unfortunately if they listened to those “facts” they would be very misled and not really understand the reverse mortgage or have the truths about them.
The FHA insured, HUD reverse mortgage, the Home Equity Conversion Mortgage or HECM, is the most common reverse mortgage in the country and the only one available in Minnesota. One can obtain reverse mortgage information from HUD. Note all those who offer reverse mortgages are not included on the FHA list of lenders. In January 2011, HUD issued a Final Rule eliminating their approval process of loan correspondents or brokers although brokers can still participate through a sponsorship from a FHA approved sponsor. For example, we, Reverse Mortgages SIDAC, are a broker, with a FHA licensed sponsor and meeting the federal and state licensing requirements through the National Mortgage Licensing System (NMLS), NMLS #173899.
While not on the FHA list, brokers offer many benefits including working with many different lenders, are local, often meeting with you face-to-face in your home. Review the difference on my post, “Are You Confused on Whether to Use A Reverse Mortgage Broker, Bank or Lender.”
Do you go to a plumber, politician or the media if you have health issues? No you go to the doctor, and you go to the doctor who specializes in your specific condition. The same is true with reverse mortgages, go to the person who specializes in reverse mortgages.
Get the facts from someone who specializes in them, has years of experience and only offers reverse mortgages (not other mortgages), one who works with various lenders, is local in your state not a “call-center” where they only talk with you over the phone. A financial advisor can be part of the team to help you analyze your overall financial situation.
Keep in mind, the decision is yours on whether or not the reverse mortgage is right for your situation. It’s not up to the Attorney Generals, politicians, seniors advocates, media, reverse mortgage counselor or originator/loan officer.
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Blog posts’ information is current as of date post published, program is subject to change in in the future. Contact us for current information, 651-762-9648.
This site or the information provided is not from, or approved by, HUD, FHA, or any US Government or Agency.