Reverse Mortgage Stories To Warm The Heart

Posted on January 3, 2010 by Beth Paterson, CRMP

Enjoying retirement with a Reverse Mortgage

As we look to staying warm during the winter season, I thought I’d share with you a few of the many client stories that have warmed my heart through the years showing where the reverse mortgage made a difference in the life of seniors.

There have been numerous situations where I have done a reverse mortgage and saved a senior’s home from foreclosure. One in particular had already gone through the sheriff sale. Working with an attorney we were able to help her buy the home back on the last day. We had to jump through many hoops to make it happen but the client was able to stay in her home of many years. She was so appreciative! It always warms my heart when we can help a senior stay in their home as they desire especially saving the home from foreclosure.

Helen really wanted to stay in her home basically no matter what. Her husband was in a nursing home and she was having some health issues so initially her family wanted her to move to senior housing. After talking with them and her social workers I tried to convince Helen to move. Then I received the call from her family saying Helen really wanted to stay in her home and they wanted me to do the reverse mortgage for her.

It was challenging from the standpoint that Helen had some early dementia and couldn’t remember things unless I wrote the answers to her questions under her question – even though the answers were written in my handouts and in my book, the only way Helen could connect the answer to the question was to have them written together. I remember spending a day, yes over 8 hours, with Helen to explain the details then another day to do the application and there were numerous phone calls and mailings in between. She had an attorney involved and had set up a power of attorney but Helen was independent enough to want to be involved through the process. During followup conversations with Helen I found that she did understand the reverse mortgage as a result of my taking so much time with her.

After many conversations with and then with the blessings of her family, social workers, and attorney we did the reverse mortgage for Helen. She was able to stay in her home until her death about 5 years later. Through the years I heard from her caregivers on how the reverse mortgage had made a difference for Helen. When she passed away the family called and asked me to attend her funeral because I had made such a difference in her life. Helen was one of the most challenging clients for me but it was a good feeling that I was able to help her fulfill her dream of staying in her home and that I had also made a difference for the family.

Lucy needed some extra funds to be able to stay in her home. She was cutting back on expenses like getting her hair done, cut off her cable TV service, just the little things that can give a person their dignity. When we did the reverse mortgage for her she was able to receive the services that returned her dignity. Lucy was a sweet independent woman that I always enjoyed talking with even after the loan was closed.

Fulfillling dream with a Reverse Mortgage

Fulfilling dream with a Reverse Mortgage

Carol had wanted to see a play in England that was going to end shortly after she had contacted me about doing a reverse mortgage. We closed her reverse mortgage and it was funded on a Wednesday. Thursday she was on a plane to London to fulfill her dream and see the last viewing of the play that Saturday. It gave me great pleasure to be able to help her fulfill her dream.

The reverse mortgage allowed Len to retire so he and Mary could live in their retirement home closer to their children. At the age of 70 Len was still working many hours and it was difficult for him. He and Mary owned two homes (one close to work and the 2nd close to their children) and was continuing to work in order to make the mortgage payments. Doing the reverse mortgage allowed Len to retire because by paying off their current mortgages the mortgage payments were eliminated. Len and Mary are enjoying their retirement living in the home closest to their children as their primary resident, keeping the 2nd home as their vacation home. I talk with them several times each year and they are so relieved and thankful for the reverse mortgage. Their family has also told me the difference I have made in their parent’s life. This situation too warms my heart because of the difference the reverse mortgage has made in their life.

These are just a few of the stories that have warmed my heart – each and every one of my hundreds of clients have touched me in one way. I feel blessed to be able to make a difference in the lives of seniors and help them stay in their home with security, independence, dignity and control.

Read some other articles with additional stories at: “ Reverse Mortgages Help Celebrate Independence;” “Reverse Mortgages Finance Home Care;” “Finance Retirement With A Reverse Mortgage;” “Reverse Mortgages Answers Prayers;” and “Know A Senior Who Wants Security, Independence, Dignity And Control? A Reverse Mortgage May Be the Answer!”

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-bV

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.

Looking To Relieve Caregiver Stress? A Reverse Mortgage May Be The Answer!

Posted on December 22, 2009 by Beth Paterson, CRMP

Are you a caregiver, one who is taking care of a loved one? And as a caregiver are you also balancing your career, family, home and life activities? Are you stressed from all of this? Are you overwhelmed at trying to handle everything and find options to help your loved one?

When taking care of your loved one are you wishing you could focus on being the child or spouse instead of paying the bills, managing the budget, preparing the meals, ensuring their needs are met, medicines are taken, managing the household or being the nurse? Are you trying to finance their needs along with your own? Are you wishing you could just sit and visit, read to them, go for a walk, go out for a relaxing lunch, or go shopping instead of dealing with everything else?

A reverse mortgage may be the answer to help you. With a reverse mortgage you can reduce your stress and hire the assistance from a care manager, companion service, home care agency, daily money manager and/or find services to help with the yard and household chores. With the services you can return to your role of child or spouse and do the things you enjoy doing with your loved one.

A reverse mortgage is a mortgage with special terms for senior homeowners 62 and older that allows seniors to remain in their home with security, independence, dignity and control. The advantage for seniors is that there are no income or credit score qualifications and there are no monthly payment requirements. The borrowers keep the title to the home and are responsible for taxes, insurance, and maintaining the home. Unlike a conventional loan the low-interest accrues, increasing the balance with no payments due until the home is no longer the primary residence of the borrowers. In addition, the reverse mortgage is a non-recourse loan which means there is no personal liability to the borrowers or their heirs for repayment if they our their heirs are not retaining ownership. When there is remaining equity at the time of sale the funds go to the borrowers or their heirs.

The funds can be used for any purpose, whatever the needs or wants of the seniors. The advantage to you, the caregiver, is that funds would be available to get the services to help your loved one so they can remain in their home and not depend on you and you can enjoy your time with them rather than being the nurse, the money manger, the cook, the yard worker, etc..

Some of the resources available to assist you include:

A care manager who is a professional such as a social worker or health care professional who can assist you or your family to manage the medical, psychological, and social affairs, through assessments, identifying needs, and then planning, coordinating, and monitoring services and resources to assist you in financial, legal, and housing needs.
Daily Money Managers can assist with day-to-day finances such as paying bills, balancing they checkbook, sorting the mail.
Companion and home care services are services provided in one’s home ranging form companion and basic home chores to medical care such as nursing, occupational, speech, or physical therapy and other medical therapies. Home Health Care providers may hold licences and provide skilled cares which are done by licensed professionals such as a social worker, nurse, or home care aide and can provide personal care and assistance such as activities of daily living like bathing, dressing, grooming, transferring, toileting. Companion oar personal care assistants provide companionship and supervision but cannot provide personal or nursing care. Their services are available from minimal hours to 24 hours and live ins.

So stop being so stressed, look into a reveres mortgage to see if it is right for your loved ones to have the funds for their security, independence, dignity and control. It could be a wonderful present to yourself.

Other Blog articles you may find helpful:

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link: http://wp.me/p4EUZQ-bL

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.

Having Our Seniors Share Their Memories, Dreams and Desires To Receive Security, Independence, Dignity And Control

Posted on December 9, 2009 by Beth Paterson, CRMP

With the families gathering for the holidays now is a good time to discuss memories, dreams and desires with our senior loved ones. One of the most important things to keep in mind is having an understanding of the senior and considering what they want. As George Santavana stated, “Before you contradict an old man, my fair friend, you should endeavor to understand him.”

Our seniors are valuable to our families and to our society. They are not just a potted plant in the corner that looks beautiful. They bring experience, knowledge, history and a sense of who we are. They have and continue to contribute to our world. While we treasure other things that are old, we often discount our senior’s opinions, needs and desires.

Sister Mary Germma Brunke wrote, “It is the old apple trees that are decked with the loveliest blossoms. It is the ancient redwoods that rise to majestic heights. It is the aged wine that tastes the sweetest. It is ancient coins, stamps and furniture that people seek. It is the old friends that are loved the best. Thank God for the blessings of age and the wisdom, patience and maturity that go with it. Old is wonderful!”

How can we help make “old” wonderful? As you are visiting with your loved ones ask them what they remember about moving into the house they first purchased, what they like about the neighborhood. How do they feel about where they are living now. Have them share memories of their friends from their youth and what they treasure about the friends in their life now. What do they cherish? What has value to them? What’s important to them?

Have your loved ones define security and find out what gives this security to them. From their viewpoint what does it mean to be independent? How do they define dignity in their life? What do they need to feel they still have control and choices in their life?

Listen to them without making judgments. If they repeat the same story several times, look at it as a process or stage they are going through. It doesn’t mean they have dementia, it may just mean that something about that time in their life has a significant impact on their life. Find out the details of that time of their life and what it means to them now.

There’s a wonderful book by David Solie, M.S., P.A., “How to Say It To Seniors: Closing the Communication Gap with Our Elders” that provides insight into understanding and gives great suggestions on how to have the discussions with your loved ones.

As you listen to the answers of your loved ones are you discovering that they want to stay in their home? Are they struggling financially? Do you need a little extra help with chores or getting out to church or visiting with friends or going to a movie? Do they need some physical therapy to help be able to do what they desire? Is nutrition and meals a concern? Would assistance in bathing be helpful?

There are many options available to help seniors meet their needs and desires. If they want to stay in their home and need some extra cash, consider a reverse mortgage. If they need some extra help, a home care agency can help them. Home care agencies provide companion services, meal preparation, medication reminders, bathing and skilled care. Physical therapy can be brought into the home. Adult Day Services are an often overlooked option. And if the family dynamics come into play, a Geriatric Care Manager can help facilitate as well as assist in determining needs and resources.

Reading some of my other blog articles will help provide you and your loved ones with information to help their life to be wonderful:

“Reverse Mortgages Help Celebrate Independence;”

“Know a Senior Who Wants Security, Independence, Dignity, And Control?;”

”Reverse Mortgages Finance Home Care;”

“Finance Retirement With Reverse Mortgages;”

“Be Educated About Your Options of Care and Financing The Care.”

“Aging is not ‘lost youth’ but a new stage of opportunity and strength.” (Betty Friedan) Let’s honor our seniors at this stage of their life with the value they provide to us and with the opportunities available to meet their needs and achieve their desires.

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.

Be Educated About Your Options of Care and Financing The Care

Posted on November 26, 2009 by Beth Paterson, CRMP

Education and planning are the keys to making decisions especially when it involves care while aging. You need to be proactive and know what resources and options are available. With the education and a plan you have more options and can be proactive rather than reactive.

As Forest Gump said, “Life is like a box of chocolates, you never know what you’re gonna get.” This is especially true for aging. In mid November I was fortunate to participate in and be considered a trusted advisor at the Minnesota Private Duty Home Care Conference, “Keeping Mom and Dad at Home”. During the conference attendees were encouraged to plan the future as they would a trip, looking at what would they put in their suitcase for the journey of aging and be prepared for what isn’t known to happen along the way.

Conference attendees reviewed what is known about seniors and their families. We looked at what is known about seniors:

They underestimate their situations
They don’t want to worry or be a burden to their children
- So seniors don’t tell their children what’s going on
They want their families help
- Families often don’t have the time or the financial means to help
Role reversal is uncomfortable
They are fearful of nursing homes and moving
93% say they want to stay in their home

Then we looked at what we know about the families of seniors:

They want to help
They are busy; they are the sandwich generation dealing with their own family, careers, life
They see changes but don’t know what they mean or what the warning signs are
They may become frustrated with their parents denials
Role reversal is uncomfortable
It’s generally women who are doing the caregiving; Minnesota is #1 in the country for working women.

Consider what’s important to the seniors, what do they want for their journey? It’s important to involve the seniors in the process, the plan, and have them agree with the plan. Discuss their wishes along with what you think is needed. What will provide them their security, independence, dignity and control of their life? Including a mediator and/or trusted advisor is a good idea. If they are resistant to bringing someone else in, discussing their options, or accepting outside help, tell them that they may not need this but that you do.

By being educated and having your plan in place if a crisis occurs means more options will be available along with decreased costs. Being reactive at a time of crisis means less options are available along with greater costs. Emotional and reactive decisions make for poor choices and actions made from regret and guilt.

Part of the education and planning means getting the facts. Unfortunately we have been conditioned to think that seniors will end up in a nursing home; that an assisted living facility provides all the care needed and is often the only option; that home care is short term and the nursing home and/or assisted living is safer than being at home.

We need to recondition our thinking to:

Seniors can live at home indefinitely
Home care can provide a nursing level of care at home
Living at home can be safer; you receive a 1 to 1 ratio of care versus 1.5 or more of care per person
Living at home is affordable

Let’s compare the costs of home care options and assisted living rent and with home care options:

Home Care 1	$1,296/month	3-hour visits, 4 days a week, $27/hour
Home Care 2	$3,024/month	4-hour visits, 7 days a week, $27/hour
Home Care 3	$4,536/month	6-hour visits, 7 days a week, $27/hour
Home Care 4	$8,500/month	24-hour or live in care, one-on-one care, $275/day; includes a live in caregiver and frequent visits from a RN
Assisted Living Rent for 1 person	$2,800/month 1-bedroom$3,200/month 2-bedroom	Care packages range from $300 to $2,700 and would be above and beyond the rent; additional care would be charged per hour by a home care agency; there is an additional charge for a 2^nd person in the apartment
Assisted Living Rent & Home Care 1	$4,096/month	One bedroom apartment, 1 person plus additional care at 3-hour visits, 4 days a week, $27/hour from home care agency
Assisted Living Rent & Home Care 2	$5,824/month	One bedroom apartment, 1 person plus additional care at 4-hour visits, 4 days a week, $27/hour from home care agency
Assisted Living Rent & Home Care 3	$7,336/month	One bedroom apartment, 1 person plus additional care at 4-hour visits, 4 days a week, $27/hour from home care agency
Nursing Home	$6,000 – $12,000/month	Single or double room, level of care and facility amenities

Let’s look at selling and moving into an assisted living vs staying at home with a reverse mortgage:

Details: Home Value $200,000; 80 year old (reverse mortgage funds available will depend on age, older one is more funds available)

	Selling	Staying in home with a Reverse Mortgage
Third Party Closing Costs	$2,211	$2,211
Less Real Estate Agent/RM Origination Fee & FHA Mortgage Insurance Premium	$12,000 (6%)	$8,000 (2% origination + 2% FHA MIP)
Net Proceeds	$185,789	$110,108 in Line of Credit; $862/month tenure-for life; or term payments structured as needed (based on rates of 11/24/09)

Now let’s take the net proceeds and compare living in an Assisted Living to living at home with a reverse mortgage and receiving home care.

Selling and Living in an Assisted Living¹	Living at Home using a Reverse Mortgage²
$185,789 ) $2,800 (rent only) = 5.5 yearsNo remaining equity from home.	No rent or mortgage payment as long as you live in the home as your primary residence³Borrower is still responsible for household maintenance, i.e. taxes, insurance, utilities and stay in your home as long as primary residence (i.e. approximately $755/month for a $200,000 home)May have retained equity depending on how long you stay in the home and the home appreciation. The loan is non-recourse.
$185,789 ) $4,096 (rent and Home Care 1) = 3.7 years No remaining equity from home.	Roof over head; funds to cover home care 1 with term payments from RM = 9.8 years³ Additionally it is likely that there would still be retained equity in the home after the 9.8 years.
$185,789 ) $5,824 (rent and Home Care 2) = 2.6 years No remaining equity from home.	Roof over head; funds to cover Home Care 2 with term payments from RM = 3.33 years³ Additionally it is likely that there would still be retained equity in the home after the 3.33 years.
$185,789 ) $7,336 (rent and Home Care 3) = 2.1 years No remaining equity from home.	Roof over head; funds to cover Home Care 3 with term payments from RM = 2.1 years³Additionally it is likely that there would still be retained equity in the home after the 2.1 years.
Then where will you go?Some assisted living will accept Medical Assistance or other public programs such as Elderly Waiver however your choices may be less.	You can stay in your home and have a roof over your head without rent or mortgage payment even after funds from a reverse mortgage are used.Medical Assistance or other public programs such as Elderly Waiver or Alternative Care can be received even with a reverse mortgage. Reverse mortgage does not impact receiving Medicare or Social Security.

¹These rates do not take into consideration care packages or increases in rent charges so it’s likely that the number of years the net proceeds would cover will be less.

²With the reverse mortgage there is a growth rate factor that is passed along to the borrower.

³This time can be extended if you are receiving Medical Assistance or other public programs such as Elder Waiver, Alternative Care or qualify for Medicare covered Home Care.

You have choices and can have control over where want to live and the care you receive. You have the right to say, I want to stay in my home (or keep my parents in their home). When educated and with a plan for the journey, you will have more choices and life will be easier.

Additional Suggested Reading:

Note: This information and these home care and senior housing figures are reflective of costs in Minnesota and are a compilation provided by the home care agencies at the 2009 Minnesota Private Duty Home Care Conference. They are approximations and can vary by company, agency, facility and geographic area.

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.

Finance Retirement with A Reverse Mortgage

Posted on November 10, 2009 by Beth Paterson, CRMP

Retirement Financed with Reverse Mortgage

Estate planning, protecting one’s investments, traveling, and supplementing one’s income are desires of retirement Large monthly payments, high interest rates, foreclosures, home repairs and modifications, and medical expenses can all be issues facing seniors. A solution for those 62 and older to finance their retirement no matter what their circumstances may be a reverse mortgage.

A loan with no income or credit qualifications and no required monthly payments can provide tax-free cash for whatever one wants or needs.* (See below for updates implemented in 2015.)

Larry and Carol did a reverse mortgage so they could pay off their current mortgage and eliminate the payments. Not having to make payments, Larry was able to retire, a much awaited and deserved event at the age of 70. With $45,000 remaining in their line of credit, which grows so more money is available to them in the future, and a good estate plan, they can live comfortably without financial pressures.

Wayne and Barb were having financial problems because of high credit card debt and medical expenses. Even though they don’t have remaining funds, with their reverse mortgage their cash flow has improved because they don’t have to make the monthly payments. With a plan and a budget, they thanked us stating, “The reverse mortgage has helped us in our time of need to change our financial situation. It has made a big difference in our lives.”

Working with an estate planner, a reverse mortgage helped Mary plan her retirement so she has funds for emergencies, medical expenses, traveling, leaving something for her heirs, and enjoying life without being dependent on her children.

A reverse mortgage is a loan similar to a conventional mortgage but with different terms to help seniors remain in their home with security, independence, dignity and control. The borrowers keep the title to the home and are responsible for taxes, insurance, and maintaining the home. Unlike a conventional loan the low-interest accrues, increasing the balance with no payments due until the home is no longer the primary residence of the borrowers. In addition, the reverse mortgage is a non-recourse loan which means there is no personal liability to the borrowers or their heirs for repayment if they our their heirs are not retaining ownership. Remaining equity goes to the borrowers or their heirs.

One can have a trust, life estate, or receive Medical Assistance, Elderly Waiver or other public benefits and use the reverse mortgage for estate planning. Not considered income, Social Security and Medicare are not affected.

It may sound too good to be true, however, it is a safe way to access cash for retirement and remain in your home as long as you choose.

Enjoying Retirment with His Reverse Mortgage

Enjoying Retirement with His Reverse Mortgage

As Myrna stated, “It is really great not to have to be concerned about where the money will come from for my long term care insurance policy payment and emergency repairs. It has relieved us of a great deal of stress and makes grocery shopping a lot easier too.” Reverse mortgages have helped many finance their retirement, how can it help you?

*In April 2015 a Financial Assessment was implemented to determine borrower’s ability and willingness to pay property taxes and insurance into the future. This safeguard help make the reverse mortgage more sustainable so borrowers can remain in their home.

For more uses of the reverse mortgage, read

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.

Reverse Mortgages Finance Home Care

Posted on November 3, 2009 by Beth Paterson, CRMP

Reverse Mortgage paid for grandma's home care

Reverse Mortgage pays for grandma’s home care

“Once we realized that we could only relieve the stress on us by contracting 24-hour [at home] nursing care for grandma, a reverse mortgage was the only way to do it.” Liz wrote me. Another borrower, Robert, did not want to go to a nursing home, yet he needed long term care. George, Robert’s son, decided they should do a Reverse Mortgage to pay for the home health care needed to keep Robert at home where he had raised his children. Robert is happy because he is living where he chooses. George is happy the family can fulfill Robert’s wishes of staying in his home and still receive the needed care.

Last week I talked with a daughter who said that moving her dad to a nursing home would “kill him,” causing him to die faster than if he stayed in his home. I constantly hear, “You’re going to drag me out of here (home) in a wooden box.” “I want to go home, not to a nursing home,” is a common statement children hear from their parents after a hospital stay.” But the challenge is how to make this happen.

Are you trying to figure out how to keep a loved one at home and have the financing to meet their needs? Home care can provide the care and a reverse mortgage may be your financing solution. The reverse mortgage can help seniors stay in their home and receive the care they need whether it’s long term or short term, a couple hours or 24 hours of care. Just been released from the rehab center Margaret needed a home health care aide to assist her so she could remain in her home as she recuperated. The reverse mortgage allowed her to hire the home care agency of her choice.

Did you know for seniors 62 and older, by converting the equity of their home into cash with a reverse mortgage…

They own home, no one else does.
They can stay in Their home as long as it’s their primary residence (in the case of a couple as long as one is still in the home).
They won’t lose their home because of a reverse mortgage if they abide by the terms of the loan – they don’t have to make monthly payments.
Tax-free money is government insured and guaranteed to be there for them (consult your tax advisor).
There is no personal liability to them or their heirs when the loan is repaid as long as they or their heirs are not retaining ownership.
They or their heirs get to keep any remaining equity after the loan is paid off.
There are no out of pocket costs, income or credit score qualifications for the loan.

Consider this…

They can access more funds if their mortgage is currently paid off or has a low balance.
Their cash flow improves when their current mortgage or lien payment is eliminated.
They’ll have extra cash for whatever they need or want! For example:
- Paying for care at home
- Make home repairs or modifications
- Cover medical expenses
- Pay taxes or debts
- Cover everyday living expenses
- Strengthen personal and financial independence

Home care and a reverse mortgage can help fulfill a senior’s wish of staying in their home when some extra help is needed. Consider the desires of the senior, what are their wishes? What will make them comfortable and give them peace of mind? Don’t deny a senior based on your opinion of reverse mortgages. Don’t let reverse mortgage closing costs scare you, they compare to the costs of conventional loans but with a lot of additional benefits and protections. If they want to stay in their home, don’t tell them to sell, realize there are solutions right under their roof.

Know the facts about reverse mortgages and work with a lender who has knowledge and expertise in reverse mortgages – it can make a difference for your satisfaction and making your life easier. I’m proud to have received this statement from Liz whose grandma I assisted with a reverse mortgage: “We make phone inquiries to 7 different reverse mortgage companies. Beth at Reverse Mortgages SIDAC had the best combination of resources, years in the field, step-by-step explanation of the process, investigating and appraising us of the options, comprehensive written materials sent promptly, advanced sills in communication with us and grandma, and high degree of emotional sensitivity. We were under pressure to have the funds to pay for grandma’s care, so their skillful management of the process proved to be critical. We appreciate Reverse Mortgages SIDAC and would recommend them without reservation.”

Additional suggested reading: Be Educated About Your Options of Care and Financing The Care

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.

One Bad Apple Spoils The Bushel of Reverse Mortgages

Posted on October 26, 2009 by Beth Paterson, CRMP

Reverse Mortgage Apples Every industry has their bad apples and reverse mortgages are no exception. However the few and far between “bad apples” in the reverse mortgage industry are not representative of the industry or the product as politicians, media and some reporters are stating. Headlines such as “Beware of Reverse Mortgages” is a disservice to seniors because it scares away the seniors who could benefit from a reverse mortgage. So even the reporters and politicians are bad apples spoiling the bushel of reverse mortgages.

There is little evidence of subprime lending and fraud with reverse mortgages. The National Consumer Law Center Report recently released which claims reverse mortgages are the next subprime mortgage is not based on statistical evidence. As Peter Bell, President of the National Reverse Mortgage Lender’s Association has pointed out, the cases sited in this report are over 3 years old and some have been dismissed in the legal system.

Some of the instances mentioned in this report are not abuses by lenders but by those who took advantage of seniors who had the reverse mortgage. My Blog article, “It is NOT Reverse Mortgage Fraud When…” outlines some claims of reverse mortgage fraud that aren’t really reverse mortgage fraud.

Let’s look at the bad apples of fraud in the reverse mortgage industry:

One bad apple was where a scheme was set up to flip homes using a reverse mortgage.
Another bad apple was an investor who sells the property using a quit claim deed then the buyer applies for a reverse mortgage using an inflated appraisal and a fake mortgage company. The senior then refinances using a reverse mortgage paying off all debts including the fake mortgage providing the investor funds – some of these seniors were homeless prior to the scheme and didn’t understand the terms of the loan or the need to pay taxes and insurance on the property. Protections have been implemented to stop these types of schemes.
An originator who proceeded with the loan closing knowing the borrower had passed away was another bad apple.
HUD has charged another bad apple for violating HUD’s regulations and is in the process of proceedings to have that company’s FHA license pulled and the people involved will be put on HUD’s sanction list and not be allowed to work in the industry. (This lender does both conventional and reverse mortgages – the violations were based on conventional loans, not reverse mortgages s0 this was not really reverse mortgage fraud but it likely could have been.)

Out of all the reverse mortgage lenders and reverse mortgages these are the only instances I found to be real fraud and this is not an issue with the product itself but with a person or persons. If there are more, I couldn’t find them in my search of reverse mortgage fraud through the many sites and articles found at the FBI, Federal Trade Commission, HUD, National Reverse Mortgage Lender Association, and other industry reports. Obviously with only these instances, reverse mortgage schemes and fraud are not increasing or set to be the next subprime focus.

Yes, there is always a risk of potential increase of scams and fraud as there is a risk of increase of scams with anything including increase of theft from a store, identity theft, medical or insurance practices or products, on and on. And while everyone doing a reverse mortgage, a conventional mortgage or any financial transaction should know the facts and beware of scams, three or four instances does not mean the product should be avoided. Would you stop shopping because it involves using cash or a bank card just because there is a risk of increase of theft or identity theft? No, you just take precautions. Do you stop driving your car because there is a risk of increase of car theft. No, of course not, you just take precautions.

HUD has many protections in place making the reverse mortgage the safest loan available to seniors. These protections include required third-party counseling, now with a new protocol (see my Blog article “New Protocol for Reverse Mortgage Counseling”), regulating fees, prohibiting cross-selling, implementing a wait period for home purchases (a result of a scam) as well as review of marketing practices and disclosure of fees.

Meg Burns, Director, FHA Single Family Program Development U.S. Department of Housing and Urban Development (HUD) has stated, “the program has the potential to benefit seniors with a wide variety of financial needs and, as such, should be thoughtfully considered by all seniors making financial planning decisions.” She has stated that widespread abuse is unsubstantiated and shares the reverse mortgage industry’s concern about decisions based on lack of knowledge, as outlined in her statement, “I have grave concerns about the overzealous attention by legislators to the reverse-mortgage sector. Federal regulators are going to pay attention, but they don’t know the product. We have yet another party entering this world who wants to layer on additional consumer protection, but they don’t understand the product well enough-[and yet] we have auditors nipping at our heels.”

Instead of highlighting how many seniors have benefitted from the hundreds of thousands reverse mortgages that have been done and how originators have bent over backwards to help seniors save their home from foreclosure, eliminate mortgage payments, have cash to repair or modify their home or have funds for medical expenses or home health care, or funds for their retirement during the economic downturn the media and politicians focus on the rare instance of fraud.

Consider a few of the many comments we have received on how the reverse mortgage made a difference for seniors:

“Thank you! I now have my bills paid, money in the bank, and I can take a vacation this summer.”
“It helps me keep up with bills I cannot cover with my limited income. It also allowed me to remodel my home to improve its value and be more comfortable. I greatly appreciate it.”
“The Reverse Mortgage helps out a great deal and solves many problems.”
“It has relieved us of a great deal of stress and makes grocery shopping a lot easier too.”
“The only way we could comfortably stay in our home of 42 years”
“A reverse mortgage means I’ll have a place to live even in case of serious illness.”

Options should be considered however their homework has not been done when reporters, politicians, and even “senior advocacy” groups state:

“The reverse mortgage should be a last resort.” A last resort to what? As one of my borrowers stated, “When retired it is the last resort.”
“Get a home-equity line.” First, most seniors don’t qualify for a conventional loan and if they could, they would have to make payments (often what they are trying to eliminate or avoid). And even if they can afford the payments today, what happens when “life happens” and they juggle between making mortgage payments, paying their utilities or paying medical bills and putting food on the table.

Besides, the reverse mortgage IS a home equity loan. It is a home equity loan with special terms for seniors including no income or credit score qualifications, no monthly payments and is a non-recourse loan insured by FHA with a lower interest than they can qualify for with a conventional “forward” loan. The loan is not due and payable until the home is no longer the primary residence or on their 150^th birthday. It also offers more flexibility on how they can receive their funds including monthly payments, line of credit, lump sum or a combination of these.

“Sell and move.” Most seniors want to stay in their home where they have raised their children, are familiar with the neighbors and neighborhood and have a lot of emotional ties. Additionally moving and selling can cost more than a reverse mortgage. Read my Blog, “I Want To Stay In My Home – Don’t Tell Me To Sell!” which compares the costs.

Another common misstatement and myth is “reverse mortgages have high fees.” Actually the costs of the reverse mortgage are comparable to a conventional FHA loan. When comparing costs side by side to a conventional loan the difference is the up-front FHA Mortgage Insurance Premium. The benefits of FHA insuring the loan include guaranteed funds, a lower interest and the loan being non-recourse. For a better understanding of costs and a comparison read “Reverse Mortgage Closing Costs – High or Mythical?”

To make sure you aren’t working with a predatory lender, check references, check to ensure they are a HUD approved lender, know they specialize in reverse mortgages, have experience, knowledge, and are willing to meet with you to review the details, before the application, during the application and at closing. You should review “Don’t Let Fear Keep You From A Reverse Mortgage But Know What To Look For In A Lender” to know the questions to ask when talking with an originator.

Our company is proud to receive comments such as “I am completely satisfied with all aspects of my reverse mortgage. From start to finish, it was handled very professionally. I never had a feeling that my questions and input were not of importance (thank you – I had many questions!!) Beth, you assured me that the procedure was on time and going smoothly, and that was a wonderful feeling! Thank you for being the kind of super advisor that makes you so special”

So don’t let the bad apple spoil the bushel of reverse mortgages for you. Get the facts, know what to look for in a lender, and explore the option to see if it might benefit you as it has benefitted hundreds of thousands of senior homeowners.

To get the details and facts straight, the media should read a couple of my other Blog articles: “The Media Needs Their Reverse Mortgage Facts!” “But Wait, There’s More… Reverse Mortgage Facts the Media Needs To Know” and “When You Don’t Know What You Don’t Know About Reverse Mortgages.”

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.

New Protocol for Reverse Mortgage Counseling

Posted on October 19, 2009 by Beth Paterson, CRMP

Since its inception when HUD started insuring reverse mortgages 20 years ago, anyone considering a reverse mortgage must receive counseling from a 3^rd party HUD approved counselor. Now effective this October a new protocol has been put into affect. To remain on HUD’s Counseling Roster, counselors must have passed the National HECM (Home Equity Conversion Mortgage) Counseling Exam. Only counselors who are employees of HUD-approved housing counseling agencies can take the exam and then be eligible to counsel potential reverse mortgage borrowers. Additionally they must have completed at least one HECM related training course within the past two years and meet some background check requirements.

With the intention to keep lenders from influencing counselors, lenders are required to provide potential borrowers with a list of 10 counselors, 5 are to be local and the additional 5 are the national counseling agencies. Also according to HUD’s requirements lenders are prohibited to provide only one or two counselors and/or steering to a particular counselor.

The purpose of the third party counseling is to make sure potential borrowers are familiar with the terms of the loan, the costs, and advise them of other potential options. The advantages can be if the potential borrowers have not talked with a lender or a lender has not provided the details they are getting the basics of the reverse mortgage. If they have talked with a lender and the lender has done a good job explaining the reverse mortgage, the counselor will reiterate what the lender has explained. Counseling sessions should generally take about an hour and HUD allows counselors to charge up to $125 commensurate with the time of the counseling session.

Through the years we, the ethical lenders, have been amazed how counselors have not followed HUD’s requirements, steered to particular lenders, told borrowers they shouldn’t do the reverse mortgage, how they should take their reverse mortgage funds, charged the full allowable amount of $125 for only 15 minutes of counseling time, and a number of other violations of HUD’s regulations.

When we from Prestige Mortgage, LLC, Reverse Mortgages SIDAC, meet with our prospective borrowers we usually take an hour to two hours going through the details and the calculations, reviewing their situation and discussing options for their situation. After the counseling session when we ask our borrowers how the counseling session went, we consistently hear, “They covered just what you did.” This means our borrowers have received enough education to have a good understanding of the loan.

Besides the new protocol to be a counselor, there will be a new protocol for the counseling session. Prior to the counseling session HUD is requiring that prospective borrowers receive calculation pages comparing programs, the amortization schedules, the Total Annual Loan Cost (TALC) and a booklet titled, “Use Your Home to Stay at Home” published by the National Council on Aging.

From what we understand counselors will be doing a financial analysis. Additionally counselors will be asking 10 questions in which borrowers will need to answer at least 5 correctly in order for them to receive the counseling certificate. If they can’t answer the questions correctly then they will not receive the certificate and will need to wait a minimum of 7 days and then go through another “limited” counseling session to review the topics they didn’t understand. And if counselors feel the prospective borrowers don’t comprehend the basic reverse mortgage details, they can withhold the counseling certificate.

The intention is to help borrowers assess their situation and whether the reverse mortgage is right for their financial situation. While on the surface this sounds like a good idea, the concern is whether the counselor will be passing along their opinion and not letting the borrower really make their own decisions and withholding the counseling certificate if they choose based on their opinion. This has happened in the past with counselors telling borrowers they should cut back on getting their hair done, not using the proceeds for a trip, shutting off their cable TV, etc.. I believe the discussion should be held however, the final decision should still be the borrowers. And we have to consider what provides seniors their security, independence, dignity, control and choices of their life. Visit my Blog articles: “Who Are We To Judge How Reverse Mortgage Funds Should be Used?” and “Is Your Opinion of Reverse Mortgages Denying Seniors?”

I’m proud that we take so much time educating our borrowers and discussing their situation and options so they can make their decision based on the facts of the reverse mortgage. Also that they have the information and knowledge to be able to answer the questions they will be asked during the counseling session.

With the new protocol of the counselors, I believe (hope) the best counselors will remain and the counseling sessions will provide the education without the opinions of the counselors being shared. I also hope that the counselors will be following the required protocol knowing that if they don’t HUD is likely to pull their ability to counsel. Time will tell if the new protocol of the counselors and the counseling session will benefit borrowers or make it more cumbersome and/or discouraging for the borrowers.

The best I can do is continue to educate borrowers on the facts of reverse mortgages, discuss their situation and options and respect them to make the decision best for their own situation and have the information they need when they go through the counseling session.

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.

Reverse Mortgages Answer Prayers

Posted on October 5, 2009 by Beth Paterson, CRMP

“I now have peace of mind.” “This really helps out a great deal and solves many problems.” “My friend is a changed man.” “You’re an angel.” “You’re sent from heaven.” “What a mission you do.” These are words I have heard from people who have a reverse mortgage.

Seniors may have many years behind them, but they still have many valuable years ahead of them with some important living to do. Yet they often find it difficult living on a fixed income. Sylvia wrote me, “As a senior citizen, I had been having some concerns with my finances. Being on a limited income made much needed household repairs and property tax payments very difficult to meet. I was going to have to make a choice soon about whether to continue to live in my house, or move in to an apartment. The costs of continuing to live in my home were getting beyond my means, but I wasn’t ready to leave the home that I had raised my children in.” She decided to use the equity in her house to make life easier and meet the financial obligations that she had.

A reverse mortgage is a loan that enables homeowners age 62 and older to receive cash out of their home (in the form of a monthly check, line of credit or lump sum of cash), with no monthly payments and no repayment due until the homeowner permanently leaves the home. As long as the homeowner is 62 or older and lives in their home with enough equity to pay off any current mortgages or liens, and the home meets HUD’s minimum property standards, they qualify for a reverse mortgage – there are no income or credit qualifications. Currently the only program is the FHA HECM (Home Equity Conversion Mortgage) which is insured by HUD.

People have lived in their homes for many years and have many memories there. They’re familiar with their surroundings and want to stay in their home. Moving into an apartment can be expensive and the money from their home sale will only pay rent for a certain number of years. The reverse mortgage helps seniors stay in their home, remain independent, and maintain or improve their lifestyle, and have the financial means to fulfill their goals and dreams. Ed, one reverse mortgage borrower, says, “The reverse mortgage is great. It gives us some elbow room.”

Those who do a reverse mortgage use the cash they receive for reasons ranging from paying for everyday living expenses to supplementing their current income. A reverse mortgage can eliminate current mortgage payments, provide cash to pay bills, fulfill dreams, meet goals, travel, or take on new hobbies. Some people want to make home repairs or afford to go out to eat with friends more often. Helping pay for grandchildren’s education, covering medical expenses, or paying long term care insurance premiums are other ways cash from a reverse mortgage is used.

Now with the interest rates so low, those who are relying on the interest from their CDs are suffering. People who were counting on their investments for their retirement are also struggling with their finances. More and more people turning to the reverse mortgage to supplement their income who thought they would be financially stable in their retirement years.

The cash received is considered tax-free and Social Security and Medicare benefits are not affected. It is possible to receive public benefits (Medical Assistance, food stamps, or county home health care) and still do a reverse mortgage. However, Social Security Administration, legal services, and/or tax consultant should be consulted for each particular situation.

Often children aren’t even aware that their parents are struggling to make ends meet at the end of the month. After they had closed on the reverse mortgage, one couple I know confided to their daughter that they used to go three days at the end of the month without food or even milk. Now they have the money to live comfortably and even take their children out to eat once in awhile.

Bernadette wrote me after closing on her reverse mortgage stating, “With joy and delight I have felt hope and even vision anew in knowing that this home belongs to me. It comes with a challenge for me to realize that I am accountable in using these funds to achieve goals otherwise not possible.”

The reverse mortgage answers prayers for many by helping them maintain their lifestyle, have security, independence, dignity, and control while they are still living. For me, it is a

ministry and rewarding to be able to assist seniors to stay in their home and have security, independence, dignity, and control.

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.

Is your opinion of reverse mortgages denying seniors?

Posted on September 28, 2009 by Beth Paterson, CRMP

As you are advising seniors do you advise them based on your opinion of reverse mortgages? Do you believe that reverse mortgages are expensive? Do you believe it’s foolish to do a reverse mortgage because of the “high” costs and a “better solution” would be sell? Do you believe it is more practical for a senior to move in with an adult child? Do you believe they should consider a conventional mortgage instead of a reverse mortgage? Or get some financial assistance from their child? Are you criticizing seniors for doing a reverse mortgage and not selling or finding financing from another resource?

While sometimes the cold hard financial facts may demonstrate a better solution than the reverse mortgage. However, have you considered what the senior’s desires are? What about their comfort and happiness? Do they really want to sell? Do they really want to live in senior housing? Would they really be comfortable living with a relative? Would they really be happy if they moved out of the home and community they are familiar with and comfortable in? And what impact would receiving financial assistance from a child have on the child’s financial situation? What is going to give the senior their security, independence, dignity, and control? Advising based on your opinions is denying seniors their comfort and happiness as well as their control and choice.

Being familiar with their surroundings, their community, having the bank and grocery store down the street may give comfort to a senior. The neighbor may help with the yard work, watching out for them, bringing them a meal once in awhile. Their choice may be to stay in their home because that is what brings them comfort and makes them happy. They may feel more secure living in their familiar surroundings.

Moving in with an adult child can mean a loss of independence, dignity, and control for a senior. There could be additional stress and more of a financial burden on the child.

Having a child provide financial assistance through just providing funds or a sale lease back could have a negative impact on both the senior and the child. The senior will have lost some of their independence and dignity by depending on their child. The child’s situation may change and they may not be able to afford the financial assistance in the future. If it’s a sale lease back situation, the child may need to sell to meet their own financial circumstances which could displace the senior. Which would mean the senior’s security would be at stake.

I know a woman who sold her home to her daughter and son-in-law with the agreement that she could continue to live there. When the children moved in to the home that had been hers for years the daughter and her husband took over the main living area and she had to move her belongings to the basement and a different bedroom. They started redoing the yard, not necessarily a bad thing but since they were now the owners they were making changes she was not comfortable with. Additionally they have parties every weekend which disturbs her peace and quite. Unfortunately she is no longer comfortable and happy living in “her” home. This in the long run is affecting her peace of mind and her health. She no longer has her independence, dignity or control of her living situation. And her security could be in jeopardy if the children decide they want the house to them selves and require her to move out.

A reverse mortgage helps seniors with their many financial needs including paying off current mortgage payments, repairing or modifying the home, covering their basic month to month living expenses, paying for home health care or medical expenses.

Before you base your advice on your opinion of reverse mortgages, know the facts: “When You Don’t Know What You Don’t Know About Reverse Mortgages” and some of my other Blog posts will help you with this. Read “Reverse Mortgage Closing Costs – High or Mythical?” to see that reverse mortgage costs compare to conventional mortgage costs. “I Want To Stay In My Home – Don’t Tell Me To Sell!” will help you understand that selling and moving is not less expensive and may have negative consequences in the future. And to get a better understanding on how the reverse mortgage provides, security, independence, dignity and control read, “Know A Senior Who Wants Security, Independence, Dignity, And Control? A Reverse Mortgage May Be The Answer.”

While you may believe the best solution would be for a senior to sell, move in with a relative, or do a conventional mortgage, consider what will provide comfort and happiness for the senior as well as what will meet their desires. Don’t let your opinion of reverse mortgages deny seniors. It’s their personal choice on how and where they choose to live.

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.

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Is your opinion of reverse mortgages denying seniors?