Have you ever heard something that was almost too good to be true? Most of us have, and as the saying goes, “if it sounds to good to be true; it usually is.” Unfortunately there seems to be enough con-artists, or folks wanting to make a quick buck over doing what is best for the customer, to prove to us that the saying is true. This has a catastrophic effect on us as a society today due to the fact that when honest people do come out with a legitimate product, or solution to our needs, our immediate reaction is, “what’s the catch.”
Babette Bach, Advocate for the Elderly
I believe the reverse mortgage industry has become one such product that has great benefits and is a legitimate, honest product, yet has fallen victim to the suspicions of our culture. I am not advocating that every senior rush out and get a reverse mortgage because they are not for everyone. Remember, mortgages are products, just like commodities we purchase everyday. There are needs that each product meets and there is no single solution for any array of problems we face. However, there are also products that meet a great deal of problems, yet seemingly get a bad rap from people who do not understand them.
I recently came across an email from a mortgage broker asking to see if there where any no income loans available for her senior buyer. As it turns out, she had a client who was 73, recently sold his home that allowed for access to a great deal of cash, and his income was trailing off. The buyer wanted to purchase a small modest home, but obviously would not qualify for a traditional mortgage. Many loan officers suggested a reverse mortgage. There are no credit issues, income issues, or assets issues to contend with. Her buyer could simply purchase a home using a reverse mortgage, which essentially would mean that he could put a substantial down payment down on the home and then receive payments verse making them. Understanding the benefits of a reverse mortgage, this is an absolute “no brainer,” yet she was still searching for the “no income loan” because that is where her comfort level was.
CNBC had a recent debate on reverse mortgages as well. Dennis Kneale of CNBC, spoke on the pros of reverse mortgages, and Babette Back, an elderly law attorney represented the cons. The analyst clearly viewed Kneale as the victor stating that Bach not only made a poor case in showing why reverse mortgages are not beneficial, but she clearly did not understand the details of a reverse mortgage, having to read from notes on her lap.
Personally I have seen this pattern throughout my own investigation on reverse mortgages; the ones who try to show how unjust they are to seniors, clearly prove that they do not understand how the product works.
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