The changes to the reverse mortgage program, which were implemented on September 30, have been polarizing to say the least. On the one side, it’s could be the best thing FHA has done in order to make the program safer for future consumer while still protecting the Mutual Mortgage Insurance Program. On the other hand, it may make the reverse mortgage program less attractive for both affluent borrowers and more modest borrowers.
At this point, however, it’s all speculaion as the changes have barely passed their two month threshold and there are still 10 months to go before the changes even reach the one year mark. Maybe then would be a better time to note whether or not the changes have been successful or not.
Having said that, I agree that there might be some validation to the fact that reverse mortgages may have become a less attractive option for some borrowers, especially affluent borrowers (on the surface). However, there is still something to consider: while affluent borrowers may invest elsewhere in order to fund their retirement, that doesn’t guarantee that their investments will always pay off handsomely.
Stocks and bonds are like a zig-zag, one week may pay off handsomely, while another may see borrowers scrapping the bottom of the barrel. The point of the reverse mortgage, especially for affluent borrowers, is that it’s a safeguard against selling depreciated stocks or bonds.
During a bad week, if need be, a borrower can withdraw from their reverse mortgage line of credit and stay afloat. During a successful week, the line of credit can remain untouched until it is necessary again.
I don’t think the new changes have made reverse mortgages less attractive, maybe for some borrowers, maybe on the outside, but the industry has started an uphill battle to educate borrowers and financial planners on the benefits of using a reverse mortgage to fund retirement.
I’m not giving up until everyone is fully aware of their options as far as the reverse mortgage is concerned.
It’s not enough to speculate and analyze anymore. It’s our responsibility as professionals to educate consumers on the changes and offer possible advantageous avenues in order for them to benefit from the program in the short and long run.
If you want more information on the reverse mortgage program give PS Financial Services a call at (888) 845-6630 or via email at info@PSReverseMortgage.com. We do not pressure those who inquire. We are simply here to help.