Webinar Video Replay- Solutions-Based Sales

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Jim C Manuel May 26, 2021 at 11:11 am

Lppk forward!

Jim C Manuel May 26, 2021 at 11:32 am

Great presentation–can I receive “replay” Thanks, Jim C. Manuel

.James E. Veale, CPA, MBT May 26, 2021 at 3:50 pm

A willy billy pick a pay plan is all right as long as none of the MIP or accrued interest is deductible for income tax purposes; however, if any of the interest and MIP can be categorized as deductible, the borrower should strategize with their income tax planner as to the most tax efficient way to benefit from deductible MIP and interest. In some cases the benefits could be as high on an annual average as $125,000 in tax savings on proprietary reverse mortgages with unpaid principal balances of $4,000,000 at closing. Here the offsetting problem could be lost cash flow, especially with a fixed rate product.

Perhaps the best product to enlist in this strategy is an adjustable rate HECM. In some cases with a sufficient available line of credit some or all of that line can be used to pay the interest down. The refund could then help pay down the current unpaid principal balance which went up by the cash borrowed to pay MIP and interest and went down by an equal amount after the payment of MIP and interest was made. So the net effect is to reduce the unpaid principal balance by approximately the amount of the lower tax bill/refund. Of course the borrower could simply keep the tax savings as cash or a prepayment towards the following year’s income tax liabilities.

These are true income tax strategies and should be explored by borrowers with their income tax planners who understand the workings of reverse mortgages and income tax laws. The planner should be knowledgeable, experienced, and competent in beneficially applying tax law to specific sets of facts and circumstances.

James E. Veale, CPA, MBT May 26, 2021 at 4:20 pm

While having a living trust is in most situations imperative, in some cases leaving some assets outside of the trust can be a useful strategy an peculiar situations despite the legal costs and time required when going through probate.

In most cases where the net estate of the borrower is low, engaging an estate and/or trust attorney may not be necessary BUT I would never discourage any reverse mortgage borrower from engaging the services of an estate and/or trust attorney.


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