What Exactly Is A Reverse Mortgage & Do I Qualify?

I think the exit of Wells Fargo and Bank of America has people questioning the reverse mortgage product inself. I think this is a bit unfair. If you dig a little deeper and look at the big mess both banks are dealing with on the forward side it's easy to see they want to get out of speciality programs and focus on their core business.  It's happened before with Household Senior Services (Household Finance Company) and TransAmerica, who both developed their own propriatary reverse mortgage programs and helped get reverse mortgages into the mainstream.  Both Household and TransAmerica decided to get out of reverse mortgages and focus on their core business. I worked for both companies and was blessed with the opportunity to educate seniors on a way to safely tap into their equity and at that time, few people heard of a reverse mortgage.

It's important to look at the reverse mortgage for what it is. An important financial tool for senior homeowners to safely use their equity and at the same time comfortably know they can stay in their home until they pass away.  But if circumstance warrant selling the home and moving, they can take their equity with them.

I feel people in influencial positions, a trusted advisor, real estate agent, cpa, elder law attorney or family member can be much more helpful if they take the time to understand reverse mortgages and how they can play a role in the seniors financial and life plans. 

I have confidence the program will survive.  We just all need to spread the word about reverse mortgages in an accurate way and encourage others to check it out for themselves and see if it may be a smart financial decision.  You can't stear them wrong by pointing them toward education and evaluation.

Thank you for your comments, James. The structure of the reverse mortgage program is safe as they don't have to make monthly mortgage payments and never have to worry about being foreclosed on as long as you live in the home, keep property taxes and homeowner's insurance current and maintain your property.  And I find that my clients are very careful with their proceeds and use it sparingly, or get rid of other debt and eliminate their monthly payments and really improve their financial situation.  Agreed, there are a few that may not be so wise with their money, as there are in every age group.  I agree that reverse mortgage counseling is useful, but I'm not so sure it would stop someone from making poor choices on what they do with their proceeds.  It may stop them from being persuaded from taking out an annuity but will it stop a greedy child from taking advantage of their parent?  Probably not.  I find that people who let their children take advantage of them have been that way long before they considered taking out a reverse mortgage. One way children of seniors take advantage of their parents is by preventing them from taking out a reverse mortgage, for the purpose of preserving equity for them after their parents pass away.  So many seniors go along with what their children tell them and continue to make sacrifices so their children can have more.  Many often with mortgage payments they can’t afford while their children don’t help with the payments, just insist they continue to pay down the debt so they have more for themselves.  Pretty greedy if you ask me.   

Your comment about people selling reverse mortgages short without looking into it has been a problem since the early days of reverse mortgages. As a reverse mortgage professional, I point out the inaccuracies in the mainstream media and so called 'experts' are not experts at all but someone called upon to report on reverse mortgages and they don't even take the time to learn the facts about the program. Other miss-information comes from the general public who are way too willing to give financial advice, usually.. DON’T DO IT, and they really should mind their own business, especially since most have not done the research necessary to give any advice.