Head Of Reverse Mortgage Group Says Article Was Tainted
To The Editor:
We are writing to urge you to consider ways to amend your publications taint of reverse mortgages caused by the May 24 article entitled, “What Boomers Should Know About Reverse Mortgages for Mom and Dad.” This article heavily quoted the views of financial planners who appear not to have worked with or even considered reverse mortgages for their clients. A balanced viewpoint, with perspectives from financial planners who are actually knowledgeable about reverse mortgages, would have provided a more useful discussion.
While I dont profess to be an expert in financial planning, I do believe that the role of the financial planner should be to evaluate the clients particular situation with an open mind and recommend actions and products that will best meet and serve the clients future financial needs, goals and desires. This evaluation should take into consideration the clients lifestyle needs and desires.
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Your article is confusing in terms of the types of clients of financial planners that are being talked about. The headline and numerous sentences, though, suggest that financial planners should first and foremost try to maximize as much of the expected inheritance from the parents as they can, even to the point of facilitating actions to discourage the parents from taking any stepssuch as getting a reverse mortgagethat might help the parents financially, but result in less money to the kids. In our view, if the financial planners client is the senior, the planner has a fiduciary responsibility to act in the best interests of the client. Conversely, the financial planner whose clients are baby boomer children should not be trying to meddle in the parents finances to assist the clients own personal motivations.
Reverse mortgages should be viewed as a potential component of a financial plan that is put together for senior clientsnot as a threat to this financial plan. In fact, a reverse mortgage can provide the cash to fund other financial products that the planner may suggest as part of an overall plan, like annuities, long term care insurance, etc., and, in fact, we hear from financial planners every day who recognize the value of reverse mortgages as part of their planning efforts.
As an organization that promotes public awareness about reverse mortgages, we consistently say that reverse mortgages aren’t for everybody. For instance, it might not make sense economically for someone expecting to move or sell his or her home within the next few years.
For many seniors, though, a reverse mortgage does make sense and can provide innumerable benefits. A reverse mortgage can enable seniors to increase their monthly cash flow to meet specific important needs and goals. For instance, seniors using the proceeds from a reverse mortgage might: pay off their remaining first mortgage to boost monthly income; repair or make improvements to their home; purchase long term care insurance or pay out-of-pocket medical costs; buy a new home (or second home) without having to use up their own cash or make monthly payments; pay off high-interest credit card debt; etc. A number of seniors also are obtaining reverse mortgages as part of broader estate-planning strategies, but thats a topic for another whole article.
Some of alternatives to reverse mortgages suggested by financial planners in the article are unrealistic, costly or potentially harmful. One suggestion was that seniors instead take out a home equity line of credit or loan. Many seniors, however, will not qualify for either because they don’t have sufficient income to make monthly payments. They also would be using the money borrowed to make the monthly payments on the loan, hardly an effective strategy.