Reverse Mortgages and How They Can Help You
Attention seniors over the age of 62 (and children and loved ones of those seniors) please educate yourself and learn the facts before judging Home Equity Conversion Mortgages (“HECM”) aka reverse mortgages. I attend numerous senior events throughout Southern California. I typically give speeches and presentations to seniors and their families in an attempt to provide information and clarify the many myths and misconceptions that surround this incredible loan product. About 6 months ago my 67 year old father called me and told me that he has been working two jobs in order to try to make ends meet. He told me that he was getting tired and did not know how much longer he could continue working at this pace. My father, who lives in Florida, told me that he has a small military pension and social security but that was not enough to pay for all of his bills which is why he picked up the jobs. Although he had a considerable amount of equity in his home it was not paid off. In fact, his monthly payment was much higher than I expected it to be due to the fact that my father had refinanced a few years back into a 15 year loan. I suggested that he look into a reverse mortgage. My father’s immediate reaction was one you might expect. He said, “Oh no, I’ve heard about those, I do not think a reverse mortgage would be good for my situation.” I asked him what he knew about reverse mortgages and he proceeded to tell me everything that he had heard, 90% of which was completely wrong. I told my father that there were five considerations that he needed to take into account:
- I was his son. There is an implied fiduciary duty with the fact he was my father. As his son, I would not advise him to do anything that I thought would hurt him in any way.
- I was a beneficiary to his estate. I was one of the beneficiaries to his estate so recommending a reverse mortgage could affect the value of his estate.
- I assist people in California with reverse mortgages. I told him that I work with seniors like him all of the time and that my suggestion to obtain a reverse mortgage was based upon my knowledge and understanding of the product.
- I am a licensed attorney (I am licensed in 3 states). I told my father that I have thoroughly reviewed the program and did not find anything that he should be wary of. I did tell him that he needed to thoroughly familiarize himself with the product and that I would be glad to teach him all about the program.
- I cannot help him get a reverse mortgage in Florida as I was not licensed there. Therefore I had no financial benefit from him getting a reverse mortgage.
After a lengthy discussion I discovered the basis of his apprehension were statements made by 2 of his acquaintances and an online article that he read. I demanded to see this article. My father was unable to remember where he saw the article. In other words, my father’s beliefs about the HECM program were based on hearsay and an unsourced article. I told my father that he was too intelligent to establish an opinion without educating himself first. I told him he should be ashamed of himself. I then spent the next 45 minutes providing him with a thorough understanding of how the HECM product works.
The moral of this story is to not rush to judgment.
Michael Gaddis, J.D. assists seniors and their family with their reverse mortgage needs throughout the State of California. For more information on Michael Gaddis, J.D. or FLG please visit www.FrontierLoanGroup.com or contact Michael Gaddis, J.D. directly at 760-692-5950 or by email at Michael@FrontierLoanGroup.com. FLG’s headquarters are located at 6104 Innovation Way, Carlsbad, CA 92009. Frontier Loan Group, Inc. is licensed by the California Bureau of Real Estate license#01449152 NMLS#345305 Michael Gaddis, J.D. is licensed by the California Bureau of Real Estate license #01433800 NMLS#280011.