Involuntary Retirement

reverse mortgage news



Older workers face ‘involuntary retirement’.
Are we reaching these homeowners?

  • In January 2020 the unemployment rate for those 55 and older was 2.6% [MarketWatch]
  • By April 2020 the unemployment rate spiked to 13.6% for those 55 and older [MarketWatch]
  • After the last recession (2008) those between the ages of 51-60 waited for an average of 9 months before finding new employment while those 25-34 were working within 6 months. [Urban Institute]

Many older Americans are still working, or at least recently were. Either way, they must meet their daily living expenses. This demographic while not completely forgotten is rarely mentioned. Even on this show I typically say a reverse mortgage may help those in their non-working years or retirees. However, a recent column caught my attention.

“Dear Liz”, writes one reader to LA Times columnist Liz Weston, “I read with interest the letter from the person who was a tour guide and lost their job due to the virus. I kept reading, expecting you to suggest a reverse mortgage. Are these a bad idea?”.  Weston replies, “not necessarily” and then goes on to explain if there’s sufficient equity in the home a reverse mortgage could pay off the existing mortgage and “might be worth the effort”. In May MarketWatch noted Americans 55 and older have been clobbered by the coronavirus’ economic fallout…

[read more]In January of this year, MarketWatch notes the unemployment rate for those 55 and older was 2.6%. By April that unemployment number jumped to 13.6%. While our youngest workers have a higher rate of unemployment, older unemployed workers face unique challenges. The Urban Institute found that after the last recession of 2008 those between the ages of 51-60 waited an average of 9 months to find a new job while those 25-34 were working again within 6 months.  Age discrimination is easier to recognize on the job but is much more subtle during the hiring process. All which leads us to the undeniable fact that millions of older homeowners are facing a forced retirement and financial crisis. 

The good is many may find their solution literally right above their heads and in the walls that surround them. Where unemployment benefits and a loss of income create a cashflow crisis reverse mortgages will increasingly become the logical solution.

So let’s step back for a moment and consider our marketing. What is our message? Are we using the term retiree repeatedly? Do our mailers, emails, and online ads ASSUME that the homeowner is retired? It may be time to tweak our approach to appeal to the unemployed worker over the age of 62 who owns a home.  So, practically how could YOU reach this target audience? One possible approach is to host workshops on the subject of ‘INVOLUNTARY RETIREMENT’ -for older workers who were laid off. These sessions could include short presentations from key senior service providers or experts and of course feature how homeowners may leverage their home to replace lost income with a reverse mortgage’s loan proceeds. CPAs and financial advisors may want to begin to inquire about their client’s employment status which may have changed as a result of the pandemic. Another tactic is to reach out to your local television and radio stations to pitch an interview on the impacts of unemployment for older residents and realistic solutions.

On August 6th PlanSponsor-dot-com wrote that The New School’s Retirement Equity Lab expects another 1.1 million older workers will leave the labor force in the next three months. The need to fund retirement is ever-present but the more immediate and pressing challenge of INVOLUNTARY RETIREMENT or unemployment of older Americans should spur our specific and strategic efforts. In summary, the solution remains the same while our approach should evolve to adapt to the specific pitfalls our present economy presents.

many older Americans have been laid off facing an 'involuntary retirement'
many older Americans have been laid off facing an ‘involuntary retirement’
Many investment and reverse mortgage ads focus on the affluent retiree. The truth is many are struggling, especially those who've lost their jobs.
Many investment and reverse mortgage ads focus on the affluent retiree. The truth is many are struggling, especially those who’ve lost their jobs.
One LA Times columnist sees potential value in a reverse mortgage, especially for those who have been laid off.
One LA Times columnist sees potential value in a reverse mortgage, especially for those who have been laid off.
MarketWatch noted Americans 55 and older have been clobbered by the coronavirus’ economic fallout. In January of this year MarketWatch notes the unemployment rate for those 55 and older was 2.6%. By April that unemployment number jumped to 13.6%.
MarketWatch noted Americans 55 and older have been clobbered by the coronavirus’ economic fallout. In January of this year MarketWatch notes the unemployment rate for those 55 and older was 2.6%. By April that unemployment number jumped to 13.6%.

The good is many older homeowners may find their solution literally right above their heads and in the walls that surround them. Where unemployment benefits and a loss of income create a cashflow crisis reverse mortgages may increasingly become the logical solution
The good is many older homeowners may find their solution literally right above their heads and in the walls that surround them. Where unemployment benefits and a loss of income create a cashflow crisis reverse mortgages may increasingly become the logical solution

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What comes AFTER the Coronavirus?

life after coronavirus covid-19 economy stagflation



A look at our industry’s growth and the potential economic repercussions of the COVID-19 pandemic

Sheltering in place took on a new meaning for HECM lenders in the first weeks of the coronavirus pandemic. Not only did employees and originators shelter at home, but many also hunkered down slowing their loan production as loan profitability collapsed in the secondary markets.

So what may we expect after the coronavirus or COVID-19 crisis is behind us? Our first indicators may be found in the proverbial eye of the storm that lies between the control of the virus’ spread and the anticipated long-term economic fallout in the decade that follows.

Today we examine 3 possible outcomes:

  • Fewer property tax deferral programs for seniors
  • Economic stagflation
  • Technological innovation and adaptation

New Jersey Governor Phil Murphy’s plan would ax property tax aid for seniors

 

Wealth disparity and home equity



Wealth inequality, economic chaos & the role of home equity

Wealth and income inequality. Pulling back from the distasteful political debates that continue to rage on about the haves and have nots it is a clear and present reality. The Pew Research Center made these startling findings. “The wealth gap between upper-income and lower- and middle-income families has grown wider this century. Upper-income families were the only income tier able to build on their wealth from 2001 to 2016, adding 33% at the median.” Why such a disparity? Good question. “The reason for this is that middle-income families are more dependent on home equity as a source of wealth than upper-income families.” With home equity playing a crucial role for middle-income Americans reverse mortgages and equity-extraction loans will become even more essential.

Pew Research Center Paper

CNBC: 2nd Quarter GDP Plunged 32.9%

Fraud Begins with Family

Fraud begins at home

Some adult children are especially anxious to get mom and dad’s inheritance. Others are so impatient that they take matters in their own hands- in effect receiving an early advance on their elder parent’s bequest.

This tragic drama of elder abuse plays out thousands of times each day while many regulators and lawmakers continue to portray financial and mortgage professionals as the typical perpetrators. After all, regulating these rapacious salespeople requires an army of regulators and enforcement officers.

So where can these heartless thieves typically be found? It turns out you don’t have to look far. Like most things, it begins at home. Michael Doll cites the National Council on Aging’s startling statistics which reveal nearly 90% of all financial crimes committed against elders are committed by family members. The familial hall of shame ranks the most likely players as adult children, grandchildren, and then nieces and nephews.

Many have witnessed the financial abuse inflicted by immediate family members. One series of incidents in my own neighborhood comes to mind in which a step-grandchild stole thousands of dollars from his elderly grandmother who was suffering the early effects of Alzheimer’s disease. “Grandma. Can I ‘borrow’ some money?” The problem is he never repaid her as her faltering recollection was that her trusted grandkid would have certainly paid back the last loan.  He did not. And the deception continued for the better part of a year until a family member became aware of the scam.

In the process of completing the application and financial assessment, reverse mortgage professionals become acquainted with the homeowner’s financial assets. What red flags should they watch for? Here are just a few indicators of potential abuse.

  • An adult child who is unusually interested when their parent will receive loan proceeds and how the money will be distributed.
  • The presence of a child or grandchild living in the home who is abusing illegal or prescription drugs.
  • The homeowner has little or no understanding of their own financial situation.
  • The homeowner is showing the early signs of diminished mental capacity and confusion.
  • Financial paperwork, checkbooks, and bank statements are disorganized and strewn about the kitchen or common areas.
  • A non-medical assistant or living aid who seems overly-interested in the reverse mortgage transaction.
  • Signatures on other documents appear to be written in another person’s hand.
  • The senior appears to be isolated from friends and other family members.

As it’s said, ‘An ounce of prevention is worth a pound of cure’. Here are some suggested financial abuse prevention tips.

  • Involve all children of the borrower when possible.
  • Ensure all adult children know how to contact you.
  • Ask if anyone has been managing their finances.
  • Ask for details about any accounts showing late payments or delinquencies. See if the homeowner was aware of the unpaid installments.

Financial abuse awareness is crucial to help our older homeowners steer clear of family members plundering funds from what is perhaps their largest and last financial asset.

How have you spotted financial abuse and what did you do in response? Leave your answers below in the comment section. 

Here’s what’s wrong with retirement planning



Where traditional retirement planning falls short

It’s easy to cast stones but to be fair retirement planning while common is perhaps one of the most challenging services provided by financial professionals. Here’s what two experts have to say…

The One Question You Should Always Ask



The 1 question Tom O’Donoghue asks on every single sales appointment

A silver bullet? More like a golden one. Here’s the one question Tom asks on every appointment that you should ask as well…

Succeeding in Tough Times: An Interview with Tom O’Donoghue



Tom O’Donoghue shares how he’s consistently closing several loans each month

Our industry is rich with experienced and ethical professionals. Tom O’Donoghue of Reverse Loans Now is just such a person. In Part 1 of our exclusive interview Tom shares exactly how he’s built relationships with area professionals, maintains those relationships, and what every originator should do when the borrower has a CPA.

Declaring Mortgage Independence-Exclusive Interview

mortgage alternatives for older homeowners



Older homeowners have a myriad of mortgage choices. Is a 30-year mortgage really a smart move or should they declare mortgage independence?

In part two of our exclusive interview with New York Financial advisor Robert Intelisano, we cover the risks of a 30-year mortgage refinance for older homeowners and why partnering with other mortgage and financial professionals may the most effective means to reach distressed homeowners.

A True History of Independence Day


As we enjoy our Independence Day Weekend, or what we commonly call the 4th of July, it’s prudent to reflect upon the origins of the day we celebrate with fireworks, barbecues, and family get-togethers.