With all the habitual bad press provided for the government insured Reverse Mortgage program one might think that the government entitlement was, by design, established to ensnare retirees and seniors so the government could prey on them in their finest hour and drain their remaining home equity. Could this really be true? On this basis, could this program have sustained itself for so many years across thousands of homeowners with such devastating effects? Or could there be more to it?
There is definitely more to the program. The HECM Reverse Mortgage was designed to provide homeowners with easy access to their home equity for various needs in retirement. In a nutshell, the program represents an instrument that fosters financial stability.
People have a habit of voicing negativity and skepticism toward things they don’t fully understand. A HECM Reverse has many practical applications but I would be remiss if I suggested you compare it to a conventional fully amortized thirty year mortgage in an attempt to help you understand it. Here in lies the source of skepticism. If we do not understand something or if it’s different than conventional wisdom, then it is quite natural to dismiss it.
The HECM is very different and hard to understand. The Consumer Financial Protection Bureau (CFPB) recently commented on the HECM that, “it is complex” and “make sure you understand it before you get involved”. Now this really does not promote confidence and comfort with the government insured HECM program.
The message is clear. We are the government. We created this program. Call waiting times may be longer due to heavy call volume. You are on your own. Pay your taxes. We should not expect more, but we do not have to remain ignorant or skeptical. The government has established the program and it is our collective job to understand it and extract the benefits.
Having said this, the HECM is a prized champion for many that seek financial stability. The practical applications range from paying off a mortgage, supplementing retirement income, addressing long term care, discretionary items, establishing an emergency reserve, or maybe solving a financial crisis.
Many financial professionals are not familiar with the mechanics of the program or the practical applications that can be tailored with a HECM. Don’t believe me? Ask your advisor how a HECM can help you extend your nest egg for up to thirty years, or maybe ask your estate attorney about the estate benefits of a Reverse Mortgage when you or your parents have longevity and a family home ends up a couple hundred thousand underwater after it has supported your retirement plan for two to three decades.
The answers to these questions and your personal bridge to seeing through the Fog of Skepticism surrounding the HECM Reverse Mortgage can be found here at
George H. Omilan