New research reverses traditional view of Reverse Mortgages
Study suggests 180 degree change in thought
A recent article printed in the February 2012 Journal of Financial Planning is suggesting that the commonly accepted practice of recommending a Reverse Mortgage as an option of last resort is not the best way to maximize retirement cash flow. Two researchers used extensive mathematical analysis to arrive at the conclusion that, early use of a Reverse Mortgage line of credit can lead to “substantially greater cash flow survival probabilities” for people who are planning for retirement. Read http://www.fpanet.org/journal/ReversingtheConventionalWisdom/
In a second event this February indicating a change in thought, the NCOA or National Council on Aging launched a new consumer website Home Equity Advisor.org. It offers information on using the equity in your home for retirement income. “The website was made possible by a generous grant from the FINRA Investor Education Foundation.” Financial Industry Regulatory Authority (FINRA) has regulatory oversight over all securities firms that do business with the public.
Reverse Mortgages – Moving Forward
In my past few Reverse Mortgage Industry Updates I have talked about “change,” Government involvement, regulation, market conditions, declining property values and public perception. While all of these topics are still evolving, it’s time we shifted gears and look at where all of these influences are moving our industry.
In the past a Reverse Mortgage was considered to be an expensive loan of last resort, not anymore! Reverse Mortgages are becoming main stream and as such lenders are adapting. We now have a new loan programs with lower costs and lower loan amounts that address the cash flow needs of a more affluent borrower. This borrower may have net worth of 1 to 3 million dollars and is looking at a Reverse Mortgage as a financial planning tool. This borrower may be trying to fund the cost of Long Term Care Insurance or, simply have a Line of Credit to offset lack of income caused by market fluctuations without the burden of additional monthly debt service. This is what the saver program does.
We will continue to see change in our industry that will shape our products and benefits, some required, some requested, all designed to meet the needs of our senior clients.
If you would like more information about the saver loan programs, call me.
Chuck Rizzo
Mortgage Services III
630-235-6586
Shock value headlines a problem for Reverse Mortgage Industry
Reverse Mortgage Daily, an internet news agency and industry leader in disseminating information on Reverse Mortgages recently posted an article about Financial Fraud click to read. The data was supplied by the Retirement Research Center at Boston College reporting a 62% increase in complaints between 2001 and 2011
Complaints are not fraud. While I believe the numbers are accurate we need to look at the time period we are evaluating. We have experienced the largest economic downturn in our lifetimes during this timeframe. Are the complaints of “fraud” truly fraud or, merely the expression of frustration by seniors as they watched the value of their retirement assets and homes diminish at a time they were expecting to use them.
These types of dramatic headlines are eye-catching but dangerous. They create fear and misunderstanding and they present honest and responsible financial professionals in a bad light. While I do believe fraud should be prosecuted, let us not confuse a complaint with fraud.
Do you know the difference between Medicare and Medicaid?
According to Wikipedia the online dictionary below are the definitions of Medicare and Medicaid. Many seniors believe that these two medical payment systems are all they need for healthcare without every really understanding what they do or how they work. The financial consequences of understanding how and when each of these apply can make a huge difference in a persons quality of life and/or care, it pays to know these differences.
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other special criteria like the End Stage Reneal Disease program (ESRD).
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states.[1] People served by Medicaid are U.S. citizens or legal permanent residents, including low-income adults, their children, and people with certain disabilities. Poverty alone does not necessarily qualify someone for Medicaid. Medicaid is the largest source of funding for medical and health-related services for people with limited income in the United States.
Medicaid is basically charity, and while it serves a function of assistance in society there are strict rules and regulations for qualifying. If you are concerned or interested I suggest speaking to a certified elder law attorney or one the specializes in wills, trusts or succession planning.
If you need a referral or are an attorney wishing to be referred you may contact me at crizzo@msiloans.biz
Value in having an experienced reverse mortgage loan officer
Just recently at a closing the notary paid me a wonderful compliment. She told my customers they ”were very fortunate that their loan officer (me) was there to explain all of the documents they were signing” and that “most loan officers don’t even show up at the closing”. She also stated that she is instructed “not to try to interpret the documents, just make sure everything is signed properly so that the loan funds”. This is good business advice for the title company as a notary is not a mortgage professional and could create liability for the title company by saying the wrong thing. Not really a good option for the new reverse mortgage customer.
Reverse mortgages are much different from forward mortgages by design. If you are considering a reverse mortgage two of the things that should be evaluated are the competency of the loan originator and the level of service you will receive. Is the originator knowledgeable, do they take time to make sure you understand what a reverse mortgage is and how it works? Feeling comfortable with your decisions means starting with good information, don’t be afraid to ask about experience and service.
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About MSI
Mortgage Services III's Reverse Mortgage Specialists are here to work for your best interests! Contact us today to see if a Reverse Mortgage is right for you! MSI is headquartered in Bloomington, IL with multiple offices in the Metro Chicago area. 