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.

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-bt

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:

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-9A

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.

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.

Who Are We To Judge How Reverse Mortgage Funds Should Be Used?

Posted on September 13, 2009 by Beth Paterson, CRMP

The media and politicians are stating reverse mortgage funds shouldn’t be used for pleasure items such as vacations, giving to children, buying a car, boat or RV. Yes, if a borrower uses their funds now for pleasure items, give money to their children or grandchildren, or even on bills or other expenses, there is a chance they won’t have funds at a later date. Seniors, as anyone, should use their funds wisely. But who are ‘we’ (media, politicians, lenders, counselors, attorneys, public, etc.) to judge and make decisions on how one’s funds should be used? Do you want someone else making decisions for you? Do you want the media, politicians, your friends, a lender or counselor to tell you that you can’t take a dream vacation because you may not have funds for your medical bills or housing at a future date?

Reverse Mortgage Allowed Travel to Florida

Reverse Mortgage Allowed Escape from Cold MN Winter & Travel to Florida

Larry and Lori did a reverse mortgage so they could continue to travel to Florida every winter. The reverse mortgage allowed them to continue their lifestyle of escaping the cold Minnesota winters and to visit family in Florida. Who are ‘we’ to determine whether this was right or not? When their health started failing, they could no longer make the trips however the reverse mortgage gave them those extra years of travel and the security to be able to do so.

Two days after closing her reverse mortgage, Jane was on a flight to England to fulfill her dream of seeing a play that was ending the weekend after the closing. The reverse mortgage made that dream a reality. Were we to take control and choice away from her and say this was the wrong use of reverse mortgage funds “just because” in future years she may need funds for “something” else? Were ‘we’ to take that dream away even if she might never be short funds for who knows what in the future?

We talk about creating a “bucket list” – the things we want to do before we die. After working for years, raising families, serving their country why can’t a senior use their reverse mortgage funds to check an item or items off their “bucket list” while they are still healthy and able to fulfill their dream? Seniors shouldn’t be treated like children, as one who can’t make their own decisions. Living on this earth for many years does not mean one can’t make their own decisions. If for some reason they cannot, then they should have a conservator appointed.

After his wife died, Bob did the reverse mortgage to replace the additional income lost from her Social Security. Catching up on bills, with peace of mind of having extra cash flow each month by receiving monthly payments, he was so excited that he could also take a dream vacation and go to Yellowstone. Taking the trip with his nephew last summer, months later he is still glowing that he was able to fulfill his dream. Was this a “wrong” decision on his part? Were we supposed to kill his dream?

Carl was in need of a new car. Because he didn’t want to make car payments, he did the reverse mortgage to meet this need of purchasing a new car without having a monthly payment. He’s still able to drive, should ‘we’ deny him his dignity and independence and say he shouldn’t purchase this car just because he is older and may have a need of funds for who knows what in the future?

If YOU, at age 30, 40, or 50, take a vacation today, are you aware that you may not have funds for your mortgage payment (or rent if you’re a renter) or living expenses, medical bills, etc. at some future date? What if you take a vacation today and next month you are in a car accident and left disabled or diagnosed with cancer and can’t work, make your mortgage or rent payment, and pay your bills? Since this is a possibility for any one of us, do you not take that vacation just because this could happen to you? We all need to act responsibly but if we live totally as if the worse is going to happen to us no one would “live” life today – we would just live in a cocoon not really living.

If you, at age 30, 40 or 50, were forced to pay off your mortgage how much money would you have for “life” – pay for food, clothes; daily needs such as soap, shampoo, hair cuts; utilities; taxes; maintain your home; automobile, gas and auto insurance; health insurance and medical expenses; go out to eat; take your vacation, etc.? Since everyone who has a mortgage is using the equity of their home for these purposes, I bet you would have a very different lifestyle if you weren’t using the equity in your home to maintain your lifestyle – whether a senior or you or me. The media and politicians need to stop judging the decisions seniors make on how they use the equity in their home, just because they are a senior doesn’t mean they can’t make their own decisions or mean they need to live in that cocoon either.

Reverse Mortgage made it possible to attend family weddings

Bonnie did a reverse mortgage to pay off her forward mortgage and improve her cash flow. Years after the closing of her loan, Bonnie wrote, “A reverse mortgage has brought me bountiful solutions to resolving financial issues. Its benefits enabled me to achieve the means to better enjoy living in my own home. The equity available was spent in several areas for home improvement. Herewith also were personal challenges, as a pledge to my church fulfilled and travel to family weddings and reunions assured.

“With a reverse mortgage you begin to have independence anew and you begin to feel more secure. Being free from monetary anxiety you have better control over spending your equity. Thus a respect for yourself increases.”

Are you going to say these personal uses of her reverse mortgage funds were wrong? Who are you or I to judge? I certainly don’t want someone to tell me how to use the funds from my mortgage. And I don’t want to tell a senior that they shouldn’t use their reverse mortgage funds to fulfill their dreams just because someone else doesn’t use their funds wisely or because they may not have funds for who knows what in the future.

With all of this said, I do believe it is important one should plan for what may happen in the future and everyone should use their funds wisely. An elder law attorney, financial advisor, and CPA educated in senior issues and reverse mortgages* can help seniors plan and think through their situations to help them make the best decisions for their circumstances. Note, I said help, not make the decisions for them. In the end, it should be the individual senior’s decision on what they choose to do with their reverse mortgage (or any) funds.

*They need to be educated with the facts from a reverse mortgage expert, not the media, politicians, word-of-mouth, etc. or they could be guiding the senior to make bad decisions.

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.

It is NOT Reverse Mortgage Fraud When…

Posted on September 4, 2009 by Beth Paterson, CRMP

You may have seen some headlines about reverse mortgage fraud. But I want to clarify that what is often being called reverse mortgage fraud is not really reverse mortgage fraud.

It is NOT reverse mortgage fraud when a senior who has a reverse mortgage and has a child or grandchild who scams their parent of money. It is theft, financial exploitation, and abuse by the child or grandchild! Children and grandchildren also steal, financially exploit and/or abuse seniors who don’t have a reverse mortgage.

It is NOT reverse mortgage fraud if a Power of Attorney misuses the funds from a senior’s reverse mortgage. It is financial exploitation and abuse by the Power of Attorney, not of, or because of, the reverse mortgage.

It is NOT reverse mortgage fraud when a title company’s closer doesn’t follow the regulations (as the story in the recent Wall Street Journal reported) and they take the money the lender sent to pay off a borrower’s current liens. It is theft and fraud by a title company’s closer and can, and has, happened with conventional loans.

As unfortunate as these situations are, they are NOT reverse mortgage fraud and the media should not call it such.

Let’s look at an analogy: If a store selling TV’s is robbed because the thief was enticed and wanted the TV it is the person who did the stealing that committed the crime, not the TV manufacturer. In this scenario the store represents the senior, both are victims. The money or reverse mortgage funds are represented by the TV. And the lender, provider of the reverse mortgage funds is represented by the TV manufacturer and provider of the merchandise.

So this is not fraud by the TV manufacture just because the thief stole the manufacturer’s TV. Nor is it reverse mortgage fraud just because the reverse mortgage provided the funds for someone to steal from or abuse a senior.

Do you we see the media publishing articles that TV manufactures committed fraud when one of their TV’s was stolen? Then why does the media and politicians accuse reverse mortgage lenders of fraud when someone else is committing the crime? Why are the words reverse mortgage used in the same sentence as fraud in these types of circumstances?

For the facts the media should know read my previous posts:

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.

But Wait, There’s More… Reverse Mortgage Facts The Media Needs To Know

Posted on August 29, 2009 by Beth Paterson, CRMP

With the fear factor and incorrect information the media is publishing, seniors don’t even want to include a reverse mortgage with other options they are considering to determine which would be the best for their situation. Unfortunately they just assume the reverse mortgage shouldn’t be done and that any other option would be a better decision. Maybe another option would be best, maybe not. The media needs to stop throwing the baby out with the bathwater and let the decision be based on the facts of the reverse mortgage, not on a fear factor.

The media and politicians need to stop assuming that a conventional mortgage or HELOC is available to seniors. Generally seniors don’t qualify for these loans. And even if they do, they too have costs similar to the reverse mortgage, a higher interest rate than the reverse mortgage, and risks to the homeowner and the lender when “life happens” and payments can’t be made. Even if they do qualify today, what happens in six months, a year, two years or five years when they can’t make the payment? Doing the reverse mortgage instead of a conventional mortgage or HELOC is generally a better option for seniors. Read “Is Waiting To Do A Reverse Mortgage The Best Decision?”

Reverse mortgages are not riskier or more complex than any other financial decision made by seniors, or anyone else for that matter. In fact, NOT getting a reverse mortgage could be riskier for a senior.

Homeownership offers more benefits than renting. One owns the home, and can benefit from the equity. If renting, one has the expense of monthly payments and covering utilities (whether included in the rent or separate) and insurance. If a senior does the reverse mortgage, payments are not required which improves their cash flow (no mortgage or rent payments). The amount of their utilities, taxes, insurance and maintenance of their home is probably less than monthly rent of another property and they are at the mercy of future escalating rental rates. If they can’t afford the rent payments where are they going to live? On subsidized housing? The reverse mortgage allows them to stay in the home without monthly payments and allows them control and choices of their living conditions.

Reverse mortgage borrowers are, however, still responsible for paying their taxes, insurance, and maintaining the home as they would be under any circumstances. If they don’t pay taxes the county can foreclose, if they don’t have insurance and there is a fire or other destruction to the home, they won’t have a home, if they don’t maintain the home and it becomes really run down the city may fine and/or evict them whether or not they have a reverse mortgage. If they are renting and can’t pay the rent they would be evicted.

Another common statement is the reverse mortgage has high closing costs – compared to what? What other financial option is available that offers seniors the same benefits?

It shouldn’t be considered a loan of last resort. As Mary, one of my borrowers who used the loan in order to retire stated, “When you retire is IS the last resort – you no longer have that income coming in.” So what do you consider a last resort?

That reverse mortgages could be the “next sub-prime” mortgage is another fear the media and politicians are forcing on all of us with no substantial or viable comparisons. Don’t let this keep you from a reverse mortgage, read my article, “Don’t Let Fear Keep You From A Reverse Mortgage But Know What To Look For In A Lender.”

The reverse mortgage has protections unlike any other loan or financial option. Borrowers are required to go through third party HUD approved counseling which reviews the program, costs, positives and negatives, risks, and other options that may be available for them. HUD is implementing a new counseling protocol for added protections.

Enjoying Life with Their Reverse Mortgage

Let’s review the facts of some benefits a reverse mortgage provides:

The title stays in the borrower’s name same as with any mortgage. The borrower owns the home, no one else does.
The borrower may be able to stay in their home as long as it’s their primary residence or until their 150^th birthday.
Lower interest rates than other loans – historically the reverse mortgage interest rates have been lower than conventional loans, lines of credit and credit cards.
A borrower won’t lose their home because of a reverse mortgage – they don’t have to make monthly payments. They are however, as with any loan, responsible for taxes, insurance and maintaining the property and abiding by the terms of the loan agreement.
The reverse mortgage funds are tax-free (although if proceeds are used for certain purposes taxes may apply – consult with a tax advisor).
The proceeds are not considered income so Social Security and Medicare are not impacted and one can receive Medicaid.
The HECM is government insured and guaranteed to be available for borrowers. (Currently proprietary reverse mortgages are not available or are limited by county and city offerings.)
Borrowers or their heirs get to keep any remaining equity after the loan is paid off.
Allows access to more funds without paying additional closing costs – there is a growth rate with the line of credit and monthly payment options.
There are no out of pocket costs, income or credit qualifications for the reverse mortgage.
There are no prepayment penalties.
Seniors can have money for covering their everyday living expenses, making home repairs, covering medical expenses, paying for long term care, paying taxes and debts, paying off their current mortgage to improve their cash flow, buy a new car, taking a desired vacation or visiting children who live out of town.
The reverse mortgage has helped many seniors save their home from foreclosure.
The reverse mortgage gives seniors their security, independence, dignity and control.

Ed wrote, “Our reverse mortgage is great. Gives us some elbow room. Special thanks to you.” Now these are the facts the media should be using!

The Media Needs The Reverse Mortgage Facts!

Posted on August 26, 2009 by Beth Paterson, CRMP

The media paints a negative picture of reverse mortgages by using incorrect or misleading information. It’s unfortunate and frustrating from the standpoint that this scares people from getting the facts and making a decision based on the true facts. A recent example of this is the September issue of Consumer Reports and TV interviews based off the Consumer Reports article.

Consumer Reports starts out with a story about Mr. Minor who is facing losing his home after his wife passed away, implying it was because of a reverse mortgage. As you read later in the article, Mr. Minor was not 62 when a reverse mortgage was done on the home with his wife who was over 62 as the borrower. He was under the impression that his name could be added on the title when he turned 62.

The fact is that when a couple is doing a reverse mortgage with a non-borrowing spouse (Mr. Minor in this case because he wasn’t 62 at the time of the origination of the reverse mortgage), lenders require the non-borrowing spouse sign documents stating they are aware they may lose the home when the older spouse is no longer in the home as their primary residence. This would also be covered with the required counseling and then again at closing. It is unfortunate that Mr. Minor had a wrong impression or may have been told incorrect information from a loan officer. Being told this information is a very rare circumstance – so the loan officer should be addressed, not the whole reverse mortgage industry blasted with negative media.

Mr. Minor says he was misled that the reverse mortgage was a good way to pay his wife’s medical bills. So if they didn’t do the reverse mortgage, how would they have paid the medical bills? Obviously the funds they received did benefit them to pay those medical expenses.

This article states that Mr. Minor owes more than the home value implying that the reverse mortgage caused this. What is not pointed out here is the fact that Mr. and Mrs. Minor would have used those funds during the term of the loan. If funds aren’t used, they are not part of the loan balance that has to be repaid, they remain equity in the home. Whether to pay medical bills, medications, home care, daily living expenses or used to pay off a current mortgage (eliminating the mortgage payments so they had those funds for other uses), the majority of the loan balance was used by them. The rest of the loan balance would have been for interest, FHA Mortgage Insurance Premium (MIP), and servicing fees. Any loan has interest and servicing fees, whether a home loan, auto loan, bank line of credit, or even credit cards. Have you added up what you paid in interest expense over the term of your loan(s)? Yes, you are making payments so the debt is reduced over time but you have paid the interest. And with the reverse mortgage payments aren’t generally made so loan the balance increases to be paid when the home is no longer the borrower’s primary residence.

Another fact that is often not stated or misstated is that the reverse mortgage is non-recourse. This means there is no personal liability to the borrower or the estate if the loan is being paid off and not kept by the borrower or the estate. So even if the loan balance is $200,000 and the home now can only be sold for $130,000, the lender is paid the $130,000 and the FHA Mortgage Insurance covers the difference.

Often called complicated, the reverse mortgage is a mortgage and while different than a conventional mortgage, they are not any more complicated than any other loan. Seniors take out conventional loans and don’t necessarily understand all the terms or risks of these. One risk on a conventional loan is that they may not be able to make the mortgage payment at a future date when “life happens.” Borrowers may then face foreclosure. Whereas the reverse mortgage helps seniors save their home from foreclosure. There are many loan documents to help disclose all the details. Additionally borrowers are required to receive counseling from a third-party to explain the loan details, this isn’t required with any other type of loan for seniors. I have consistently been told that my book, “Understanding Reverse Mortgages,” and my education and explanations make it easy to understand.

Other misleading or misconstrued statements include the reverse mortgage is not right if the children want to keep the home. While the loan will need to be repaid for the children to keep the home, they may still keep the home. Let me tell you about a borrower who needed new glasses, teeth, clothes, and some home repairs. She loved going to plays yet couldn’t even afford the local community plays. She decided the reverse mortgage would help her afford her needs and enjoy her life.

After we had reviewed all the facts, positives and negatives, and she had completed the application, she called and said she wanted to stop the process because her son didn’t want her to do the reverse mortgage. When I asked why, she said he wants to keep the house after she’s gone. Upon further questioning she said it was so he could have the house and rent it out after she was gone.

My response was to ask, “So you’re going to do without your glasses, teeth, clothes, home repairs, affording the little things you enjoy so your son can make money after you are gone?” I went on to ask, “Is he going to cover all these expenses of things you need now?” Of course the answer to this question was, “No, he can’t afford to.” I explained that he could still have the house after she was gone, he would need to pay off the mortgage balance, maybe by getting a new mortgage but then he could rent it out and make money on it that way.

Celebrating her reverse mortgage

She went ahead and did the reverse mortgage. I have received a call from her a couple times a year since she closed her loan 4 years ago. She is pleased that she did the reverse mortgage and the difference it’s made in her life. And when she passes away or is no longer in the home, her son has the option to pay off the mortgage balance and keep the home. In the mean time she’s had the use of funds to meet her needs and make her life enjoyable.

There is a statement that taxpayers are making up the difference on default loans or will need to in the future. The fact is that borrowers pay a FHA Mortgage Insurance Premium to cover any defaults. Unfortunately the MIP was put in the general fund and now there is a risk that there may not be enough funds for the current fiscal year. Plenty of borrower paid MIP dollars have been paid into FHA over the years but unfortunately the federal government doesn’t hold these funds in escrow type accounts as they use these funds for other general HUD programs. If these funds had been accumulated and reserved for the HECM, this would be a non-issue in the current year. This issue is brought on by the way the government manages these funds.

Other misrepresented statements are about closing costs being high. Please see my post “Reverse Mortgage Closing Costs – High or Mythical?” for the facts on this.

Regarding the media’s statements that the reverse mortgage should be a last resort read “AARP Has It Wrong About Reverse Mortgages” and “Reverse Mortgages Help Celebrate Independence.”

The media needs to provide the facts, not use scare tactics. When borrowers have the facts, the decision to do the reverse mortgage can be made intelligently. And, as with the hundreds of thousands satisfied reverse mortgage borrowers, those deciding to do the reverse mortgage based on the facts will find their life is much better, living with security, independence, dignity and control and a peace of mind.

In fact, today I received a call from a borrower who said, “I could not pay my bills without my reverse mortgage. I’m glad I did it to maintain my lifestyle.”

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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The Media Needs The Reverse Mortgage Facts!