The reverse mortgage industry is beginning to take on a Kafkaesque quality. On the one hand, you would think with the debacle in the sub-prime mortgage markets investors (Wall Street) would be savoring the succor of a safe, inoffensive mortgage product, like the reverse mortgage. By its terms, it does not contain the detritus that these alternative mortgage products had. Instead, the clerisy of Wall Street pundits, fearful of making another fatuous decision, have chosen to ignore the one sector of the mortgage market that they should be embracing.
Yet these pundits in essence say that "ALL MORTGAGE PRODUCTS ARE BAD". I urge those that have great vision, those who pride themselves on seeing what others can not see, to take another look at both sides of the reverse mortgage program- The HECM-government insured loan and the proprietary loan/"jumbo loan". These programs are safe and secure because no monthly mortgage payments are made, there is no income , assets and credit requirements, 50% or less LTV(depends on the program) is the norm and these loans have an average life of 7-10 years.
This country has 78 million baby boomers. The oldest become 62 this year. This means that each day for the next 20 years over 10,000 boomers a day will become 62. Today there is in excess of 4 trillion dollars of home equity that can be accessed. This will more than double in 10 years.
The National Reverse Mortgage Lenders Association, HUD and AARP and the passel of incredible caring folks that make up this great industry have worked hard to make this nascent industry the shinning light of the mortgage industry.
Accordingly, there are yet many reverse mortgage products to create, companies to develop and mergers to attract. The best part of it all, is that the more we as an industry can do, the better our clientele - our elders will fare.
Yes ,the reverse mortgage industry has much work to do. Let's stop painting w/ that broad brush and get to work. ALL MORTGAGES ARE NOT THE SAME.
As a Reverse Mortgage specialist I listen to all types of comments and concerns, but the one thing that is consistent is the seniors are in need. With the average senior having over twenty-five thousand is credit card debt alone and the rising cost of health care they need it more everyday. When you consider of what home prices were 30 years ago and what they are today even in a down turn market the profits are still huge. As a child from the 50's I grew up listening to my parents and grandparents saying get a good job with a company that has a union and they will take care of you when you get old. What a joke that turned out to be all of them paid their dues like good little sheep and got nothing for their money. THe only thing that they did right was to buy their home and pay it off! The very same home that they paid $7,000.00 for tow years ago was worth $278,000 which alowed them to pull over $170,000 out of it WOW that is a benefit worth paying for since they paid for 25 years their dues and got nothing for their money.
The Reverse mortgage industry just like every other has to be policed better to keep the money hungry salesmen from taking advantage of the seniors. I believe the good ones are the ones that spend the time educating the senior and aswering all of the questions they ask and answering the ones they don't know about to ask.
Posted by: Tim Robbins | February 16, 2008 at 11:31 AM