Between 2005 and 2009, poverty rates began rising in correlation to the economic recession; during this period, more seniors fell into poverty, with blacks, Hispanics, and single women facing higher poverty rates compared to other seniors.

As the population ages, medical expenses factor heavily into exhausting many seniors’ resources, and the chance of suffering a health condition (acute or otherwise) rose 45 to 55% for those beneath the poverty line, the EBRI study found.

“Medical expenditures go up for the elderly as they age and medical expenses have been rising over the past decade very rapidly,” says Sudipto Banerjee, a research associate at EBRI and author of the report. “A lot of people have to move to nursing homes, and nursing homes are very expensive. People who live there, they lose their income and assets very quickly.”

During tough economic times, many retirees end up spending down their assets too quickly, but Banerjee expects that the poverty rate will go back down as the economy improves.

View the EBRI’s analysis.

Written by Alyssa Gerace

From online sessions to conference calls where preliminary information is shared with a group of potential borrowers at one time, the reaction to “pre-counseling” has been somewhat mixed, though one counseling agency says it is a big time saver. 

For CredAbility, the feedback has been entirely positive, says Alan Stacy a reverse mortgage counselor. Borrowers can access pre-counseling materials through an online portal, and can go at their own pace. It makes for more quality time during the actual counseling session that follows, he says.

“It frees up a lot more telephone time for me to talk about the reverse mortgage.”

CredAbility is seeing roughly 10% of its borrowers go through the pre-counseling, after rolling it out in mid-2010. It’s popularity has grown steadily.

“It allows our clients who are computer savvy or who have adult children who are, to go on the website and learn more. It covers everything HUD requires and allows them to develop loan projections so when I follow up with the phone counseling, they’ll have those numbers in front of them,” Stacy says.

Money Management International launched an education program in September as a precursor to reverse mortgage counseling, with the goal of making the counseling process simpler. For MMI counseling clients, they can receive the pre-counseling via online or a conference call.  

Some borrowers have reported they are not happy with an additional step in the process.

One originator told RMD that the pre-counseling phone call caused frustration.

“[My client] called [a counseling agency] for a telephone counseling appointment and were informed that they counseling would be a two-stage process,” one originator told RMD. “…that really put these borrowers off.”

But optional pre-counseling has saved hours, even days, Stacy says. 

“The HUD required pre-counseling packet can be downloaded instead of having it mailed,” he says, for example. “It gets there so much faster and sooner. It allows clients to pick a date and time that fits. There’s more quality time then to discuss concerns they might have.” 

Written by Elizabeth Ecker

“This is a common sense movement that comes from elderly organizers themselves,’’ said Judy Willett, the former director of Beacon Hill Village and the new national director of Village to Village, which is based in Newton. “Ultimately, it’s elderly volunteers who organize each village, and every [group] has roughly the same values and same core goal of helping people stay in their homes.’’

Though some groups allow people 50 and over to join their village, most organizations set the age limit at 60 and up.

[One village's] offerings include a “one call’’ phone service where staff help members with requests that can range from how to hire a snow plow operator to dealing with health insurance issues. Dues also cover grocery deliveries, provided by a transportation company, and a free driving service for members – handled by volunteers – to get to medical appointments or the pharmacy.

For an additional fee, members can access a screened list of home service providers, including plumbers, electricians, handymen, physical therapists, home health care assistants, tailors, gardeners, and others. After interviewing each participating vendor, Cambridge At Home secures 10 to 15 percent price discounts from them for its members.

The state director of Massachusetts’s AARP chapter called the Village movement a “model of how to care for the elderly who want to stay in their homes.”

Read the full Boston Globe article.

Written by Alyssa Gerace

The session, featuring input from National Reverse Mortgage Lenders Association legal counsel Jim Milano addresses the topic of ethical product placement. There used to be only one reverse mortgage product choice: adjustable rate. Today, there are fixed, adjustable, standard and Saver with different margins. Regulators are paying attention, too. Originators are now in the position of educating borrowers on the different product types and offering the products that best fit their needs.

Depending on your state, you may have a fiduciary responsibility, in addition to an ethical one.

Reverse Fortunes will also cover:

• What is “steering”
• When a comparison sheet isn’t enough
• Practical measures in protecting your business
• Goals first, product education second
• A decision tree? Plant one in their minds
• Why so many fixed rates?
• The CFPB and what is to come with HECM products
• Product pricing today and tomorrow

Space is limited, so sign up now!

Date: Thursday, May 31, noon to 1:00 PM EST (9:00 AM PST). Mark your calendar!

Sign up

Retirees will look to alternatives, WSJ writes. For some, that may mean taking out a reverse mortgage, working longer or cutting down on spending. The article cites research from the Boston College Center for Retirement Research, which indicates that taking a reverse mortgage is a viable way for many retirees to get around their lack of savings problem. 

WSJ writes: 

Many retirement investors, egged on by brokers and mutual-fund companies, put a great deal of emphasis on crafting finely tuned portfolios out of stocks, bonds and—increasingly, these days—other exotic investments.

…Far more important, says the paper from the Center for Retirement Research at Boston College, are three variables that don’t require a brokerage account: how long you work, controlling spending and tapping the value of your home.

Alicia Munnell, who heads up the retirement center, decided to write the paper after being asked to speak at a conference where the topic was that more people could use financial advice.

“My concern was that it was focused on the wrong thing,” she says. The financial industry revolves around selling investments, Ms. Munnell notes, so the advice revolves around selling those products. “The discussion is always: How much in stocks, and how much in bonds? What our paper showed is it really doesn’t matter how that money is invested.”

The study was based on real-life data. It started by looking at the percentage of income that retirees typically need to replace after they stop collecting a paycheck. That was compared with actual investments as measured by surveys conducted every other year for the past two decades. (To read the report, go to http://crr.bc.edu, click on the “working papers” tab and scroll down to April.)

The verdict: Without making any changes to their savings and investment strategies, 74% of households would fall short of their income needs at age 62, and 47% would fall short at age 67, when individuals (born in 1960 and later) become eligible for full Social Security benefits.

Next, the study asked the key question: What levers could be pulled to improve the picture?

…Lastly, the study looked at tapping home equity. The collapse of the housing bubble dented the value of many Americans’ homes. But they are still most people’s largest asset. With the help of a reverse mortgage, those falling short on retirement income at age 67 dropped all the way to 36%.

Read the original article.

Written by Elizabeth Ecker

Most are likely to first go to friends and family, and then to their lender. Finally, they will seek housing counseling support, say recent results of a survey conducted by Money Management International. 

One fourth of the 1,000 survey respondents said they either needed assistance or knew someone who needed assistance meeting their mortgage payments over the last four years. A surprising result, MMI notes, perhaps due to the widespread media coverage of the housing crisis. 

For those who did need help meeting payments, 50% said they would first go to friends and family. Another 26% said they would first go to their lender, and finally just 13% said they’d first seek a credit counseling service. 

The MMI survey also found people 55 and older were less likely to have problems meeting their mortgage payments, or to know someone who needed help. This could suggest that they are less likely to have a mortgage in general, MMI said, or that they are better money managers. 

View the full survey results. 

Written by Elizabeth Ecker

A “new” reverse mortgage borrower has emerged, and Reverse Fortunes’ latest podcast talks about just what that borrower is looking for, in light of recent comments made during a congressional hearing on the FHA’s reverse mortgage program. Additionally, Reverse Fortunes’ Shannon Hicks discusses potential changes to loan officer compensation rules that may be upcoming, based on an outline from the Consumer Financial Protection Bureau.

Hicks also talks about the CFPB’s response to industry comments in the LO comp conversation as well as a recent article from CNBC that told readers about today’s options for trading their home equity for incoming payments. .

To listen login or become a free member to access past & current episodes.

Talking Points:

• A New kind of borrower?
• CFPB shockwaves from LO comp?
• We are listening (CFPB)
• Trade bills for money

Listen now. “Reverse Fortunes is the ultimate resource for reverse mortgage professionals providing the technology, training and marketing to grow your business. We are your one-stop resource for those committed to taking their business to the next level.” Editors Note: These posts are sponsored by Reverse Fortunes.

“The HECM program is an important financing option for lower- to middle-income older homeowners,” said Barb Stucki, of the National Council on Aging. “It is important that borrowers have the ability to meet the obligations of HECM loans, including paying ongoing property taxes and homeowner’s insurance,” she said. “However, we are concerned that that these financial assessments may become overly restrictive.”

A financial assessment for borrowers was attempted in late 2011 by MetLife Bank, but was later suspended by the company. Department of Housing and Urban Development officials have stated publicly that they are in the development process for an industry assessment, expected later this year.

The industry shared NCOA’s concerns when MetLife implemented its assessment, which quickly led to a shift in broker business away from the stringent guidelines. Many said it was too restrictive and limited borrowers who needed the loans most.

Stucki reiterated the importance of not making the rule too restrictive in her testimony before the House Financial Services Subcommittee.

“Ensure that HUD regulations, such as the financial assessments lenders may conduct at origination, are not allowed to become overly restrictive to ensure that the HECM program remains a viable option for “cash poor” seniors,” she said. “Reverse mortgages can bring new risks to people who may have limited experience dealing with large sums of money. However, seniors with modest incomes who do not qualify for conventional home loans may have few alternatives besides a HECM to tap home equity.”

Written by Elizabeth Ecker