Not All Agree



Despite Increased HECM Acceptance Some Reject Use of Home Equity in Retirement

thumbs-up-downPreparation and research are key when addressing those who may oppose your closely held beliefs. This requires us to approach opposing arguments with an open mind and intellectual honesty to accurately assess the opposing argument. In recent years, much has been written in both the media and professional financial publications on the benefits of strategically using a reverse mortgage as part of retirement income planning. However not all agree.

While the tide of opinion has turned in our favor amongst financial professionals, some stand opposed to the use of home equity for their client’s financial needs. Daniel Kern and Renee Kwok of TFC Financial Management in Boston, are two such individuals who recently presented their position in a recent article in Financial-Planning.com.

The co-authors cite three common ways their clients can extract home equity,

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Where There’s a Will…

How to Select, and Serve As, An Executor


We’ve talked briefly about estate planning and asset protection. But what about executing a will? Most seniors understand the importance of having a will, though they won’t be around to see it probated. And this is wherereverse mortgage news knowing proper procedure is critical.

What exactly does an executor (also known as a “personal representative”) do? According to The Office of Chronic Care Advocacy, the executor acts as a chief administrator of the estate:

• Ensuring receipt of all life insurance and retirement plan benefits
• Paying any estate debts or expenses
• Filing the necessary tax returns and paying the appropriate federal and state taxes
• Disbursing assets to the beneficiaries.

To choose an executor:

1. Select someone who is willing to serve. This may seem obvious, but many years can elapse between the time someone chooses an executor, and when that person needs to step into the role. It’s a major responsibility, and not everyone will want it. Provide for an alternate in case your first choice is unable or unwilling to perform. Naming a spouse, child, or other relative as executor is common, and he or she can hire professional assistance as needed.

2. Make sure there is no conflict of interest. A business partner or spouse from a second marriage, for example, could have personal goals that differ from those of the person seeking an executor.

For the executor:

3. Find the original will. Only an original will can be probated (have its validity verified in order to ensure the timely transfer of assets) without court intervention, which can be a lengthy and expensive process. Usual places to look are the senior’s office, desk or home safe — wherever he or she kept important papers. Another popular option is a safe deposit box, which the executor will need signatory authority to open. The executor can also call the attorney who drafted the senior’s will, who is likely to have noted where his client intended to keep it.

4. Familiarize yourself with the provisions of the will, so you understand the senior’s wishes as to how he or she wants the estate to be distributed.

5. Seek professional advice. In order to correctly administer the estate and avoid mistakes, at this point it’s wise for the executor to consult an estate attorney, tax accountant, appraiser, or any other professional(s) who can provide the necessary expertise.

6. Locate and protect the assets. The executor should also contact any life insurance carrier or retirement account custodian to determine who is named as the beneficiary of these accounts. It is possible that the estate will be the beneficiary, or the beneficiary could be a named individual.

7. Pay valid claims against the estate, assuming the estate has sufficient assets available. Depending on the circumstances, you may also need to file an income tax return for the estate for the year(s) in which the estate remains open.

8. Distribute the estate to the beneficiaries named in the will and account for the administration of the estate to the Commissioner of Accounts who was assigned to this estate when you qualified as executor.

The entire process can be complex, challenging and time-consuming, and can take a year to eighteen months to complete.

Reverse mortgage professionals may wish to share this summary with HECM clients, prospects and other seniors within your purview, since selecting an executor is as important as choosing a Power of Attorney and protecting elders from scams, identity theft, and other forms of financial fraud. The more informed and prepared someone is, the smoother the transition will be for everyone involved when the time comes.

Declare Your Independence


Open-Mtg-2018-Join-Us

7 Ways to Declare Your Independence


This coming Monday our nation will celebrate Independence Day, better known as July 4th, the historic day when the newly formed United States declared their autonomy from Great Britain. Beyond national independence and sovereignty, how can we become more independent individuals?independent2

Even as a spouse, employee or group member independence is not only desirable, it is an indispensable trait that each of us can develop, nurture and protect. Here are seven ideas for each of us to become more independent.

1. Act the Part. You may not always feel confident in a given situation, but that doesn’t mean you cannot act confidently. As I’ve often heard, ‘walk into the room like you belong there’. Confidence opens doors and often elicits respect from those you encounter.

2. Have a plan. If you don’t have a plan then you have forfeited your independence to be controlled by the whims of other’s desires, circumstances, and daily demands. If you don’t have a plan someone else has one for you, thus making you dependent.

3. Form good habits. Plans should lead to the development of …

Download a transcript of this episode here.

Looking for more reverse mortgage news, commentary, and technology? Visit ReverseFocus.com today

HECM Changes: For Better or Worse?


Do Recent HECM Changes Help or Hurt our Industry & Consumers?



Certainly one could argue that the recent changes to the federally-insured reverse mortgage have improved the reputation of the program in the eyes of financial planning professionals and the media alike. While additional consumer protections are admirable, do the numerous policy changes signal a turn for the better or worse?

man-holding-scaleA recent MarketWatch article “Could the tide be turning on reverse mortgages?” asks just such a question. Columnist Alicia Munnell opens with “after decades of skepticism and reports of scandals, the tide appears to be turning for reverse mortgages”. The New York Times Business section recently led with a story on the ‘revival of the reverse mortgage’.

While there may be a revival of the reverse mortgage in the consciousness of the mainstream media and in the minds of media pundits, our industry is not experiencing a revival but a retraction, as HECM endorsement volumes…

Download a transcript of this episode here.

Looking for more reverse mortgage news, commentary, and technology? Visit ReverseFocus.com today

The Shrinking HECM?


Challenges to HECM Growth & Measuring Success

Reverse mortgage endorsement volumes have continued their slide after a brief recovery. Despite the increased acceptance of the press and financial planning community and the ever-growing need of soon to be retirees, the Home Equity Conversion Mortgage industry finds itself challenged to grow. Welcome to the Industry Leader Update.

Perhaps we are using the wrong standard by which we measure our industry’s success in reaching age-eligible homeowners. After all, can we honestly say it is an apples-to-apples comparison to compare early HECM volumes with their limited loan qualification guidelines with the reverse mortgage of today?
reverse mortgage news


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Looking for more reverse mortgage news, commentary, and technology? Visit ReverseFocus.com today

HECM Changes: The Consequences of Interest Rate Caps

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% Rate Caps to Increase Costs: Secondary Market Concerns

rate-trapIf there’s one word that describes the recently announced proposed rule changes it’s digestion. As many professionals comb over the finer details, one can begin to see a clearer indication of the true impacts on our industry and most importantly, reverse mortgage borrowers.

First a correction. In the last episode, I regret to say that I incorrectly described the continuing payments of monthly insurance premiums as now being required to be sent to FHA monthly. That actually has been an established process for HECM lenders and servicers. What is different is that ongoing monthly premiums must be submitted even after the HECM has reached assignment status with HUD. Premium payments under the proposed rule must continue until the loan ultimately terminates.

Next, lower interest rate caps. There are two primary factors that will reduce the amount of available money to borrowers: home values and interest rates. However, another consequence of lowering adjustable rate HECM interest rate caps is the increase of interest rate margins. Lowering the interest rates caps on the adjustable rate loan would appear to benefit the consumer at first glance, but look again. While the lifetime cap will reduce volatility in FHA’s…

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Looking for more reverse mortgage news, commentary, and technology? Visit ReverseFocus.com today.

Loan Payout Manipulation

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NRMLA Issues Ethics Advisory on Planned Prepayment HECM Loans

reverse mortgage newsIt’s not often discussed or quite frankly on the radar of most reverse mortgage professionals, structuring HECM loans for higher initial payouts followed by an immediate pay-down.

It’s a tricky strategy that is unfortunately employed by a few reverse mortgage lenders or brokers, strategic prepayments following a large initial loan payout at closing. In its most egregious form, it works like this: Broker A is working with the Smiths who have a very low mortgage payoff or mandatory obligations. Approaching the loan closing date said broker encourages the Smiths to take a lump sum distribution up to the 60% first-year distribution limit keeping their upfront FHA insurance premium at one-half of a percent telling them they can repay the excess withdrawals in the first month to avoid the interest charges. Consequently, the broker benefits with a higher UPB or Unpaid Principal Balance which may increase his loan pricing or commission while the borrower is convinced they are unaffected. Isn’t this a win-win scenario?

If there’s one thing history has taught us it is that ethical guidelines are born from questionable business practices…

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Looking for more reverse mortgage news, commentary, and technology? Visit ReverseFocus.com today.

Nature Knows Best

What we can learn about aging from trees…


reverse mortgage news“If you’re lonely, sit under a willow tree,” says ethnobotanist and medical biochemist Diana Beresford-Kroeger, who then explains, biochemically, why this will help. Equal parts scientist and mystic, Irish-born Beresford-Kroeger grew up studying the interface between the arts and sciences, forging her unique perspective to illustrate how, beyond bromides, Mother Nature really does hold the answers for health and well being, for people and planet.

In The Sweetness of a Simple Life: Tips for Healthier, Happier and Kinder Living Gleaned from the Wisdom and Science of Nature, she mixes knowledge, wonder, and a heaping dose of common sense to show us how to age well, create a healthy home environment and take care of our planetary body, with humor and down-to-earth information relayed through storytelling and supported with plenty of science. Best of all, her suggestions are easy for seniors, reverse mortgage professionals, or anyone else who yearns to become and remain healthier to implement.

Building Better Brains

Dementia is on the decline, reports Laura Koniver, MD, and fish oil is one of the best ways to protect against it. Beresford-Kroeger agrees, and provides some backstory: “Omega-3 wires the body, connecting the brain to itself and to the rest of the body in the neural pathways, insulated by a myelin sheath, which surrounds the nerve fibers. Omega-3 also wallpapers the membranes of the retina to form the visual images translated and transported by the optic nerve into the brain.

“Life with very little Omega-3 changes the chemistry of the brain itself, resulting in attention deficit disorder, depression, bipolar disorder, memory loss, schizophrenia, even suicide…” Eating a diet rich in Omega-3s (e.g., lamb, saltwater fish such as salmon and sardines, walnuts, and olive oil) is a dietary solution more effective and palatable than pharmaceuticals.

No Bones About It

Then there are the aches and pains that accompany aging. Just a fact of life as our bones become brittle? Not at all, says Beresford-Kroeger. She explains how the “biological rubber” (chondroitin sulphate) that keeps our skeleton functioning can be replaced, with “a good bowl of hot homemade soup made from beef broth. It has all the ingredients to stop the aches and pains in your knees, fingers, feet, hips, neck and back.” She details what to buy and how to prepare the soup, to restore the healthy bounce elders recall from their younger years. [Note: In many communities, it’s now possible to purchase ready-made bone broth from farmers’ markets and organic butchers. Seniors should be sure to ask whether the animals were raised without hormones, on pesticide-free pastures.]

Beresford-Kroeger also describes simple steps to treat addictions (which she used successfully to cure her husband’s three-pack-a-day cigarette habit), what to eat to prevent cancer, and how to create and maintain a healthy weight. It’s the kind of kitchen wisdom our ancestors lived by, often lost today to the lure of technology and accelerated lifestyles.

The Original Social Network

Rediscovering a reverence for Nature’s vast wisdom, we’re invited to join the primal social network: trees, says German forest ranger Peter Wohlleben. “Trees in the forest are social beings. They can count, learn and remember; nurse sick neighbors, and warn each other of danger by sending electrical signals across a fungal network known as the ‘Wood Wide Web’.”

The more time we spend in front of computers and other devices, the more we need to spend time in a forest, says Beresford-Kroeger. “Walk into a pine forest; you’ll come out smarter.” She explains how the biochemical aerosols that pine trees release on warm days penetrate the human central nervous system, making us calmer, better able to focus and learn. Between pine trees, Omega-3s, bone broth, plus the plethora of additional wisdom Beresford-Kroeger shares, seniors (or anyone, of any age) can begin today to boost brainpower and overall health.

Perhaps your next reverse mortgage meeting ought to take place at the edge of a forest. At least consider keeping a jar of organic walnuts on your desk.

 

Korea’s Reverse Mortgage Program Raises Questions

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South Korea Now Actively Promoting Reverse Mortgages

reverse mortgageThe Korean Financial Services Commission announced last month that they will introduce a new set of policies in the effort to spur reverse mortgage adoption to help the elderly prepare for retirement.  Facing a rapidly expanding aging population and fewer prepared retirees the South Korean government has taken proactive steps to promote reverse mortgages while seeking to change the perception that the home is an asset to be passed on versus a pension product. The question is why doesn’t the U.S. government do the same?

Eighty-one percent of assets held by those 60 and older are held in homes or residential real estate. Sound familiar? It should. South Korean’s face similar challenges found in the United States with more pre-retirees unprepared or underprepared to fund their non-working years. Here’s just one example.

Download a transcript of this episode here.

Looking for more reverse mortgage news, commentary and technology? Visit ReverseFocus.com today.