Despite HECM changes & cutbacks, more seniors stand to benefit eliminating their mortgage payments
To say that today’s retiree is not prepared to retire is an understatement. More American’s approaching retirement have little or no savings to fund their non-working years. Not surprising in light of fewer pensions, higher inflation and rising healthcare costs. Many find themselves unable to adequately invest for retirement struggling to cover their daily living expenses. However, one of those expenses can be a forced retirement savings plan- the home mortgage.
Since the post-depression era, American homeowners dutifully paid their mortgage throughout their working years while raising a family or paying for their child’s college education. Years later, many were able to participate in the rite of passage transitioning from work to retirement paying off their mortgage. The elimination of their largest expense allowed them to enjoy a modest but comfortable retirement. At this moment more seniors are waking to the reality of just how fragile their finances truly are. Much of this can be attributed to the shift away from company pensions to workers funding their own retirement accounts such as 401(k)s and IRAs, two recessions and higher costs of living. Many older Americans find themselves forced to work well into their golden years. In 2017 it was reported that over 9 million seniors 65 and older continue to work compared to 4 million in 2000. For older Americans, the fear of death often pales in comparison to outliving their money.
The good news is despite numerous product changes, millions of seniors stand to benefit using a reverse mortgage to…
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It is absolutely clear that pessimism is striking originators. Some react to facts as if they are pessimistic. It seems all they understand is that if someone is describing things as they are, THAT is pessimism. As a close friend of mine used to say: “Don’t confuse me with the facts, I love my fantasies.” So I would say so what should be talk about and, depending, on the time of season, it was football, baseball, or the latest Clinton scandals. That was funny since as to economics I supported Bill Clinton.
Have you ever watched children that eat too candy? Try and take that candy away and they respond as if you have stolen a vital food group from their diet. If you try to explain how bad candy in excess is, they do not want to hear it. Their attitude is stop spieling out facts, just give me as much candy as I want, and never tell me how bad can candy in excess be.
Of course a lot more than candy is at stake in our industry, many originators only want to hear that the future is bright. They want to know everything is OK. If there are problems, please don’t tell me and don’t make me read about them. All I want to know is that if I do what I did in the past, all will be well.
Because of how easily a large segment of his HECM originators became ultra pessimistic when hearing difficult questions about possible interest changes that would substantially lower the principal limit factors back a little over a decade ago, the broker used to demand in our originator meetings not to talk about the future and HECMs and, oh yes, most importantly, only listen to him on these important issues.
This afternoon I spent some time going back over some of the positive articles written in various industry posts over the last five years. It is interesting to read the comments of those who were NOT pessimistic but were less than enthusiastic about the “irrational exuberance” which were claimed in these posts.
In fiscal 2014 and 2015, I read about how NRMLA was turning around negative press along with recent claims as to why endorsements have been so low these last five years. Guess what the claimed cause was? You got it, negative press. So how does one reconcile the two opposing claims? Those supporting NRMLA would say that endorsement levels would have been much worse without these efforts. Those fighting on the front lines that have had to counter negative press will most likely say that the NRMLA effort was only slightly more effective than the Extreme Summit. The right conclusion is left to the reader.
After reading the posts and the comments, it became apparent that both were looking into the dark and for now, optimists who might have sounded fully informed before fiscal 2010 have no idea what the future holds. In fact some seem intent on trying to stifle any description of the current situation because they don’t have an answer to it. Even if they understand it, they do not want to commit the resources needed to turn it around (kind of sounds like the support for the Extreme Summit).
The past is what it was. For those who try to change it, STOP it. The present is still more secular stagnation which is what it is. The future is what in part we make it to be. Just continue working harder means more of the same. After all it was Einstein who declared that insanity is doing the same thing over and over, expecting different results.If anything the last five years should have proven that.
Great comments by The_Cynic and The Positive Realist!
I liked the analogies used by The_Cynic, very good!
Great comment The Positive Realist, using Einstien’s insanity slogan.
However, it is all relative. I can’t remember the negativity I have seen over the past 7 to 8 months in our industry, it has been discouraging!
What is so sad about it all is that our negativity is spreading and spilling over to our senior homeowners!
They see it, the hear it and they are becoming more fearful of the HECM product, they are feeling it is taboo!, Which by the way, it is just the opposite!
The HECM today has more credibility than ever because of FA. Retirement planing is so emphasized in today’s society and the HECM comes into play with so many options to fill the needs.
October 2nd of 2017, having to do with the PLF ruling was a blow, no doubt about that.
However, we need to get over it and I mean quickly! Go out there, target borrowers with very little debt or none at all, target higher priced properties and what about targeting the professional sector?
Reach out to the Elder Law Attorney, Financial Planner, Financial Advisor. What about the small community banks and credit unions? Ever think about long term health care providers, churches and senior community centers.
In short, the business is out there, we need to go after different markets, pay smarter, act enthusiastic, we have a tool box full of tools.
These tools all the professional businesses and people I mentioned can use to help their senior clients.
Shannon’s presentation for this Monday was a good one, one that should be taken seriously!
John A. Smaldone
http://www.hanover-financial.com