Reverse Mortgages Now Essential Part of Retirement Savings

By Donna Linton, Reverse Mortgage Adviser, Sterling Mortgage Services Provided By Bill Binkey, Hecm Vice President, The Federal Savings Bank

Every professional in the reverse mortgage field works tirelessly to help the public overcome the never-ending misconceptions that have been plaguing our industry for three decades. We have had some positive PR, but we are far from where an industry as old as ours should be.

I have sat with skeptics at many kitchen tables and overheard misinformed seniors talking about our product with only negative comments. Even close relatives can’t seem to grasp the facts after having explained it as best I can. The problem is the result of several factors, including common misconceptions about a complicated financial product that have been hard to dispel. Most Americans simply don’t understand the ins and outs of the product, with many holding on to the false belief that the bank owns the borrower’s home.

The reverse mortgage program has changed substantially from its inception. With protections in place for nonborrowing spouses, expanded rules to police industry participants and a financial assessment to ensure the loan’s suitability for a borrower’s circumstance, reverse mortgages are a better, stronger and safer product than ever. It has become a unique financial planning tool that we now have the opportunity to educate our borrowers, financial planners, real estate professionals and professionals in general about.

Nobel Prize-winning economist and MIT finance professor Robert Merton has drawn attention to reverse mortgages. Speaking at a conference, Merton said he believes reverse mortgages will become an essential component of retirement savings. The house is the largest and sometime only major asset for many in the working middle class, he said, and reverse mortgages are well suited to tap that wealth.

“Americans have wrongly steered clear of reverse mortgages,” Merton said “This is going to become one of the key means of funding retirement in the future.”

For more information, contact Bill Binkey at 928-237-9599 or visit