Why does the Reverse Mortgage Program NEED to Exist?

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Mortgage and Lending with PS Mortgage Lending 305-791-4874 or 888-845-6630 365768

Why does the Reverse Mortgage Program NEED to Exist?

It's a pretty bold statement but I stand behind it. Aside from the negative media, the recently implemented changes and the success stories of the reverse mortgages, there is the question: why does the reverse mortgage exist?

I don't think it's a question of 'does' but a question of 'need.' There is a socio-economic need for the reverse mortgage, and even if the program changes, it can never be destroyed, just altered. Just like energy, there will always been 'the need' for the reverse mortgage. According to an article by the Mortgage Professor, "Should Government Support HECMs?," here's why:

  1. There is no other program like the reverse mortgage. Well duh but it's true. The only other program that resembled the reverse mortgage is the reverse mortgage. The problem is, how many reverse mortgage programs, besides the FHA-insured, are left after the recession? Zero. Private reverse mortgages depend on a private secondary market that collapsed as soon as the recession hit, yet the government-backed reverse mortgages still exist...
  2. Reverse mortgages provide positive externalities. The value of reverse mortgages are not enjoyed by private entities or companies, they are enjoyed by the general public. By provide a service that converts illiquid housing wealth into a spendable income, reverse mortgage take some of the pressure off of public services geared toward retirees, many of which are retiring without adequate plans despite the fact they are living longer.
  3. Reverse mortgages protect retirees against the risk of outliving their financial assets. While the common misconception is that reverse mortgages are just for the financially desperate, the line of credit option, offers retirees, who plan ahead for retirement, the freedom to draw their funds, if and when they need it, regardless of the amount. It protects their more easily depletable assets and minimizes risk of outliving your current income. 
  4. Reverse mortgage programs are a model for private programs. Most private programs that came about before the recession included various safeguards against greedy, unethical lenders, many of which were modeled after the reverse mortgage. In fact, one of the most important contributions of the program is the requirement that all borrowers be counseled by a third party, completely unaffiliated with the lender.
  5. Reverse mortgage programs are self-funding. Through the mortgage insurance premiums, paid for by borrowers, the program can be self-sustaining in terms of funds while still providing consumer protection if the borrower's home ever goes upside down. The elimination of the Standard Fixed-Rate HECM this past April has gone a long way in preventing future losses to the program.

So I ask again, why does the reverse mortgage NEED to exist...because there is nothing else like it. There have been imitations but none that could withstand the test of time. The endurance of the program, as well as its adaptability and influence, have made it, not only a valuable program, but one without that comparison.

Interested in a reverse mortgage program or want more information? Give PS Financial Services a call at (888) 845-6630 or email us at info@PSReverseMortgage.com. We do not pressure those who inquire. We are simply here to help.

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Information and content in this blog is original to Phil Stevenson

Please click the "SUBSCRIBE TO MY BLOG" button on the right, and receive more Traditional and Reverse Mortgage information in Florida and other parts of the US & Puerto Rico.

 

Phil Stevenson

PS Financial Services

Owner and Principal Mortgage Originator

Certified Reverse Mortgage Professional (CRMP)

LO #365768

NMLS #968090

Cell: 888.845.6630

Miami Mortgages & Florida Mortgages

Copyright © 2013 by Phil Stevenson & PS Financial Services, LLC

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Rainmaker
2,484,962
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

It is another economic crisis waiting to happen, I can't imagine what will happen when all the baby boomers that have these die and their kids find out. LOL

Nov 14, 2013 10:27 AM #1
Rainer
132,944
Rebecca Foresee
Alain Pinel Realtors - Morgan Hill, CA
Let's foresee the possibilities . and get results!

Phil, I have family members who have reverse mortgages and clients who inquire about them from time to time.  Thank you for sharing valuable information.  I'll be looking for more!

Nov 14, 2013 12:58 PM #2
Rainmaker
271,377
Phil Stevenson, CRMP
PS Mortgage Lending 305-791-4874 or 888-845-6630 - Miami, FL
"Mortgage Nerd" in Miami, Florida and Texas

Charles, I am a firm believer in full disclosure, that is why I don't believe it will be the next economic crisis. There are many baby boomers using reverse mortgages as a financial planning tool, not as a last resort, especially with the recent changes to the program. Either way, I always go over all the documents twice with my clients and sit down with them face to face to make sure they understand the program and what is expected of them before they sign anayhting. One top of this, they are required to go to counseling where the program is explained to them once again. They may call me if they have any doubts and I'll be there to answer. If all the parties involved are fully aware of what is expected of them I find things go a lot smoother.

Nov 14, 2013 11:28 PM #3
Rainmaker
271,377
Phil Stevenson, CRMP
PS Mortgage Lending 305-791-4874 or 888-845-6630 - Miami, FL
"Mortgage Nerd" in Miami, Florida and Texas

Rebecca, thank you very much and hope this information helps you in the future! The more educated our clients are, the better it is and that is one of the reasons why we blog. Best of luck!

Nov 14, 2013 11:30 PM #4
Rainmaker
1,143,971
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Reverse mortgages are simply a fantastic opportunity for so many. Of course there is no ONE SIZE fits all but this when explained properly and disclosed accurately can be a life saver or game changer for so many seniors.

I like them so much I did one for my own parents!!!!!

Nov 15, 2013 09:03 AM #5
Rainmaker
271,377
Phil Stevenson, CRMP
PS Mortgage Lending 305-791-4874 or 888-845-6630 - Miami, FL
"Mortgage Nerd" in Miami, Florida and Texas

David, that's great to hear...Hope it all works out for the best!

Nov 17, 2013 11:01 PM #6
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Rainmaker
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Phil Stevenson, CRMP

"Mortgage Nerd" in Miami, Florida and Texas
Ask Me About the NEW Reverse Mortgage Program!
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