Combating the misconceptions
by Donna Linton, contributor
Misconceptions in the reverse mortgage field have plagued our industry for more than 26 years.
I have sat with skeptics, and overheard misinformed seniors talking negatively about our product. Even close relatives are confused. The problem is the result of several factors, including common misconceptions about a complicated financial product. Most Americans hold on to the false belief that the bank owns the borrower’s home.
The reverse mortgage program has changed substantially from its inception. With new protections in place for non-borrowing 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 before. It has become a unique financial planning tool that may help more seniors, with the power of the HECM (Home Equity Conversion Mortgage).
Nobel Prize-winning economist and MIT finance professor Robert Merton has drawn attention to reverse mortgages.
“Americans have wrongly steered clear of reverse mortgages,” Merton said during a wealth management conference. “This is going to become one of the key means of funding retirement in the future.”
