Your Thoughts on This Cool Reverse Mortgage Strategy for Boomers

[jdeasy]

Re: Your Thoughts on This Cool Reverse Mortgage Strategy for Boom

This may all be legal and ethical and completely above board, but I agree with CJ, it just doesn't pass the smell test.

 

[Focus LTC]

Re: Your Thoughts on This Cool Reverse Mortgage Strategy for Boom

Kids finally move out and they would want a bigger house with bigger utilities and twice the space to keep clean? Don't most seniors either want to downsize or stay put because they don't want the hassle of moving?

This is a good point but it ignores the real generational differences between older seniors and boomers.

Older seniors are ever so thankful for their SS check and their Medicare. They literally thank God for it!

Boomers, on the other hand, feel like SS and Medicare are things that they earned and thus, deserve.

Boomers who are currently in their 60's do not consider themselves to be "old." To them old age begins at 80+... What I'm saying is they are still living life and want to get the most out of it.

An ideal prospect would be:

1) A senior that does not have any legacy issues. Maybe they never had kids or, they already sent their kids to college and the kids are doing just fine. Their kids are building their own future and not waiting around to inherit a dusty old house.

2) A retired professional that earned a decent income, has an IRA, nice sized pension and social security check and can easily afford the increase in property tax and insurance.

3) A senior that has worked hard, been productive their whole lives, sacrificed and feels like they finally deserve their (horse farm, penthouse, vineyard, beach front, etc etc) dream house. And he doesn't have to lay out an extra dime for it.

 

[billyg]

Re: Your Thoughts on This Cool Reverse Mortgage Strategy for Boom

Counseling is mandatory and where this all unwinds. The conversation likely ends with the seniors saying "this insurance agent is telling us that we can..."

I get that it is mandatory. What I am saying is they don't have to "pass a test", or otherwise "qualify" during the counseling. They simply need to go through counseling, but they don't get a Pass/Fail on the process. A counselor can not say, "Gee, this guy's an ***, I won't pass him."

So, again, the individual can use any reason they choose for securing a reverse mortgage, even if it is a "bad" reason by your definition.

 

[Crabcake Johnny]

Re: Your Thoughts on This Cool Reverse Mortgage Strategy for Boom

You missed my point. They have to sell their house first and buy the larger house. Only then can they determine if they ultimately qualify for the reverse mortgage. You can't sit with a counselor and say "Let's get approved on this house we're thinking about buying...."

So if by the agent's advice, they sell their house, buy the larger one and it all goes south, the agent could be in an immense amount of trouble - possibly criminal trouble.

 

[ksigmtsu]

Re: Your Thoughts on This Cool Reverse Mortgage Strategy for Boom

I think you missed the goal of his friend which was outlined with this statement:

"I have a friend in the RM business and has he been using this as a way to get bigger ticket sales"

It looks like a way to get sued by family after the fact for loss of 200,000 in inheritance after the death of the reverse mortgage holders.

There are some valid uses for reverse mortgage, I don't think this is one of them.

I wouldn't take the chance of the criminal case that might come from a state AG after they need to find a scapegoat for a news story about the dangers of reverse mortgage.

 

[Crabcake Johnny]

Re: Your Thoughts on This Cool Reverse Mortgage Strategy for Boom

It's all rubbish anyway. How's prospecting go?

"Ok, so first, you sell your house. THEN...."

Yeah....right.

 

[The Rabbi]

Re: Your Thoughts on This Cool Reverse Mortgage Strategy for Boom

As a former RM rep I must emphasize that the counseling is to make sure the people know how the RM works. And NO, it doesn't go back to the bank unless the beneficiary doesn't want anything to do with the house such as it isn't worth the payoff.

An RM, like any other creative financing, isn't for everyone.

I'm in SE Fl and just put my house up for sale and I will put it in the NY Times with 50% down and no payments to stimulate the buyers. The buyer may come on the ad but still pay cash or conv mort. It's just letting people know there is another option. Agents need to stop forming opinions and go learn.

 

[LGilmore]

Re: Your Thoughts on This Cool Reverse Mortgage Strategy for Boom

It would seem like a lot of commissions and fees paid for this transaction. Yes, it could be done but RM costs are also up there as well. So you'd be paying a real estate agent for the original home sale, take that money and put it towards a new home, finance the rest (more fees), then get a reverse mortgage that would net you less than the 200k you got out of your original house. Essentially giving up some of the gains from your original home sale.

While doable, it sure seems to be giving up lot in sales commissions

 

[retread]

Re: Your Thoughts on This Cool Reverse Mortgage Strategy for Boom

My problem with marketing RMs they way they are presently done (TV ads), is that the home may be the only leverage a senior may have if he needs long term care and does not have an LTCi policy. So you mess around with this asset and you can screw up someone's life. IOW, I present an offer for LTCi, but if they can't afford it, let them know NOT to use their RM benefit unless they first need money for LTC. At least let them know of a strategy they can use if they can't afford or quality for an LTCi policy.

 

[midwestbroker]

Re: Your Thoughts on This Cool Reverse Mortgage Strategy for Boom

Hmmm...my question is has your friend found anyone who would want to do this? I imagine that seniors who have no one to leave anything behind, having to move and go though selling a house, getting a new one and then reverse mortgaging it would seem like too much for them would be hard to find.