The Case for Reverse Mortgages

by Michael Shohoney February 2, 2009 10:38

It seems to us that the time is ripe for reverse mortgages.  Why?  Because it allows your customers to benefit from their most valuable asset.  It also helps them avoid liquidating other under-valued assets to supplement dwindling income due to the current financial crisis.  When you look at most of your retirement-aged customers, what one asset do they have that their heirs probably don't want to have to deal with in the future?  Most likely their home.  At the same time, assuming that stocks and other financial assets will recover lost value over time, it makes sense to hold those assets rather than liquidate them at these depressed prices in order to supplement income.  Additionally, stocks, securities and other financial assets are easier for heirs to deal with when the time comes.

There is general confusion and hesitation when it comes to reverse mortgages.  Many of the people that would benefit from this instrument do not understand the benefits nor the mechanics.  Many believe that it is possible for them to lose their home before they want to leave it.  Or they believe that they are not getting fair value from it.  Also, given the bad press that the mortgage industry has suffered through the past number of months, they are suspicious of anything that is unfamiliar to them.  Well, it is time for you to sit down with those potential clients and explain the benefits of this truly creative and valuable financial instrument.  You may just find that you have a number of originations just waiting to happen.