Reverse Mortgage Stories from the Trenches

A year ago I got my real estate license with the intention of selling Reverse Mortgages. I am a retired "senior" myself and I had researched the product and decided it was a good sensible option for the right client. Since then I have talked to a lot of seniors and listened to their plights and... problems. I can't get over the financial difficulties that many of these folks have gotten themselves into.

Most potential clients are widows in their mid 70's. A common statement I hear is "My husband used to handle all this". Some simply have never learned to live on a reduced income. Others are feeling the effects of inflation (higher than the government admits) and may also have shocking monthly prescription expenses.

Way too many have taken out Home Equity loans instead of Reverse Mortgages. Now they are stuck with monthly payments. One had been given a home equity line of credit with a whopping $250,000 limit. She had spent over $100,000 by the time she called me. That banker should be horse whipped. Where did he think this woman was going to get the money to make the payments? She went to the bank because she needed money, not more debt.

I have had to tell a number of seniors that they do not qualify for a Reverse Mortgage because they now owe too much on their equity loans. I took a call from a woman who did have a Reverse Mortgage but who had gone through $200,000 in just two years. She spent most of it helping her middle age "child" pay bills and rent. She hoped to re-finance!

I took a call from a man who initially sounded lucid and competent. He wanted to know how much he was eligible for. I ran the numbers and we were talking roughly $200,000. But as we talked more I realized that he had no interest in receiving monthly payments or taking a line of credit. He just wanted that cash. I do not recommend that seniors take cash. I usually recommend a line of credit....that is if they seem competent or have a trusted advisor. Finally I got him to give me the phone number of a grown daughter. Her reaction...."Oh no, not again". She had to get an attorney to get him out of his last Reverse Mortgage. She was trying to take control of his finances and get him into supervised care before he lost everything to some swindler.

In the last few weeks I have seen the refugees from the "Forward" or regular mortgage side pouring into the Reverse Mortgage Business. These people don't know a darn thing about the Reverse Mortgage program and they sure don't give a hoot about senior citizens. But they are spending money on mailings and advertising. I work in a small, ethical loan office where almost all of our business comes form referrals. We can't compete with national companies spending huge amounts of money on advertising. I may find something else to keep me busy, this is getting too crazy.

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