Let me share the strategies of three out of the box thinking seniors:

The first is a gentleman in his late 60’s. For almost thirty years, he ran a small, but successful, custom home construction firm. A few years ago, he made a personal decision never to retire. It was okay to become very selective on what he built and for whom he built it. It was also okay to take winters off, but retire – NEVER!

That plan worked fine until the collapse of the building market in 1998. After some soul searching and with the advice of his CPA and attorney, he declared an open ended vacation from construction. He will return, but not until stability returns.

Again, with the encouragement of his CPA, he and his wife secured a reverse mortgage. The monthly, tax free income from their reverse mortgage, along with their Social Security income, provides more than enough income to cover their fixed monthly expenses.

That was two years ago and, since then; they have been to Mexico twice and spent last summer at their vacation home in Northern California. He’s taken a couple of small remodel jobs but mostly to keep active and his skills honed. And, yes, he plans to resume building the minute he believes he can do so profitability and he tells me that some of his old customers are starting to think seriously about a new home.

When he gets going again, he tells me that he will repay some or maybe all of the money he pulled from their equity. However, he also tells me that he will repay only when his CPA tells him he needs to take the mortgage interest deduction. So, our client’s recession survival planning strategy will become his tax planning strategy when the good times return. Pretty smart, don’t you think?

Here is another client’s reverse mortgage strategy that you may find compelling.

Many financial authorities are telling us that these are good times to invest wisely.
There are opportunities all around us be it gold, real estate, or carefully researched stocks.

This client has been an active and quite successful equity investor for many years. Make no mistake, I do not endorse or recommend this strategy for anyone who is not an accomplished investor and one who fully understands the risk associated with all but the most conservative investments. However, this client loves the freedom to tap into a small portion of his home equity to use for securities trading purposes, without the requirement to repay for as long as he remains in his home. He calls his reverse mortgage line of credit his highly flexible margin account.

Each time I tell my clients about this gentleman or write about him in one of my articles, I once again remind all that I do not endorse this strategy nor would I recommend it to others, but it does speak to the many uses of a reverse mortgage.

The third out of the box reverse mortgage client is an 80 year old grandmother. I frequently tell her story at my reverse mortgage classes. This great lady was not content to see her legacy or her modest estate pass to her family upon her death. She wanted to pass not only her worldly possessions; she wanted to pass her values, her family experiences and traditions, along with the wisdom that comes from a rich full life. So, her reverse mortgage has provided the income to travel to her ancestral homeland accompanied by her children and grandchildren.

Her reverse mortgage gives her the ability to spend quality time with her family to share stories and family traditions as she passes on her legacy. Her legacy runs far deeper and will eventually mean far more to her grandchildren than her modest “wealth” that was previously trapped in the bricks and mortar of her home. Money is not the most important thing we leave behind. The most important gift we leave to those we love is our values, our traditions, and our wisdom.

So, I don’t think that this great lady would have much patience with those who wish to wait for a lifeline when they become desperate. She would tell her cohorts to start focusing now on what’s truly important in life. She would tell them not to wait until they pass from this life to share whatever monetary wealth they have accumulated. Do it now. By giving now, seniors are able to “package” their money with their values, wisdom, and advice.

She believes that those virtues will remain in the hearts of those they love long after the money has been spent.

I must say, I agree, but I’d like to hear from you.

Fortunately, if you are a senior homeowner with significant equity in your home, a reverse mortgage could be your answer to financial stability by converting some of that equity into spendable income. The money obtained through a reverse mortgage does not need to be repaid during the life time of the borrower, as long as the borrower continues to live in the same property.

Reverse mortgage money can be used as a source of monthly income by the senior homeowner. The added cash flow can ease tight financial budgets so seniors can have a little more breathing space and a few more dollars in their pockets. The money can also be used as a line of credit that they can draw upon when extra cash is needed. A lump sum payment is also available.

The money from a reverse mortgage can be used for any purpose the homeowner sees fit. However, I always caution my clients to be careful. This is real money and should only be used prudently and with the utmost caution.

The purpose of a reverse mortgage is to put seniors in a more comfortable position both financially and emotionally. This financial backup offers seniors peace of mind and economic stability so they can live their retirement years without the added burden of cash deficiencies.

For more information, seek advice only from experienced reverse mortgage specialists.

They come to my class for the two hours of continuing education credits that they must have for licensing purposes. They leave with the correct information and the new found ability to better serve their clients.

HUD insured reverse mortgages are heavily securitized by our federal regulators who seek to protect seniors’ best interests. As a result, more than 600,000 senior American homeowners have obtained reverse mortgages that have enriched their lives by allowing them to stay in their homes and pay their bills.

Still the myths persist. The top ten most common reverse mortgage myths include:

Myth: If I take out a reverse mortgage the lender will own my home.
Fact: False. Homeowners still retain title and ownership to their homes during the life of the loan, and can choose to sell the home at any time. As long as the house is maintained and property taxes and homeowners insurance are paid, the loan cannot be called due.

Myth: My children will be responsible for the repayment of the loan.
Fact: False. Reverse mortgages are non-recourse loans. That means, if the property is sold to pay-off the loan when the homeowner passes away or decides to leave the home for other reasons, there will be no mortgage debt for the family and heirs to repay. The maximum amount owed is the current market value of the house. If the homeowner’s heirs want to keep the home, they would pay the balance in-full to the reverse mortgage lender.

Myth: I can’t get a reverse mortgage if I have an existing mortgage.
Fact: False. With enough equity, you may be able to pay off your existing mortgage or other debt with the reverse mortgage. The reverse mortgage must be in a first lien position, so any existing mortgage must be paid off. Seniors who take out reverse mortgages are free to do anything they want with their reverse mortgage proceeds. Paying off an existing mortgage is the number one reason most seniors take out a reverse mortgage.

Myth: Only low-income seniors get reverse mortgages.
Fact: False. Although some seniors may have a greater need than others for the monthly proceeds or lump sum funds reverse mortgages offer, most simply prefer to be free of monthly mortgage payments. Without monthly mortgage payments, many homeowners find they can maintain their existing quality of life and build their savings to help with future expenses. A growing number of people who have no immediate need are taking out these loans so that they have a financial cushion for future expenses. In fact, I have several high net worth individuals who are using a reverse mortgage as a tax planning strategy.

Myth: If I outlive my life expectancy, the lender will evict me.
Fact: False. Reverse mortgage lenders put no time limit on how long seniors can stay in their homes. Since homeowners still own the property, lenders cannot evict them, provided they follow the program guidelines.

Myth: There are no objective advisors available to seniors trying to decide if a reverse mortgage suits their needs.
Fact: False. Borrowers are required to work with independent, third party counselors approved by the U.S. Department of Housing and Urban Development (HUD) in their local communities. This educational session helps them make the right decision for their unique situations.

Myth: There are restrictions on how reverse mortgage proceeds may be used.
Fact: False. There are no restrictions. The cash proceeds from the reverse mortgage can be used for virtually any purpose and borrowers should be cautious of lenders attempting to cross sell other products. Many seniors have used reverse mortgages to pay off debt, help their kids, make ends meet or to have a financial reserve.

Myth: Reverse mortgage lenders take advantage of seniors.
Fact: False. Seniors who have been victims of reverse mortgage lending schemes are extreme exceptions and typically victims of unsavory lenders. As a consumer, you should only work with lenders who are Better Business Bureau and National Reverse Mortgage Lenders Association (NRMLA) members and adhere to those organizations’ strict Code of Ethics and Standards for Trust.

Myth: I’ve heard I won’t qualify for a reverse mortgage because of my limited income.
Fact: Unlike a traditional mortgage where mortgage payments must be made each month, a reverse mortgage pays you. Because of this, many seniors who do not qualify for traditional financing are eligible for a reverse mortgage.

Myth: HUD sets the rules and, since there is little difference between reverse mortgage products from lender to lender, it does not matter from whom I secure my reverse mortgage.
Fact: Nothing could be further from the truth. The skill level and experience of the reverse mortgage professional with whom you elect to work is vital to you and to your financial future. Nothing takes the place of experience and knowledge. Check references, determine their experience, ask questions, and work only with the best.

The article began by reviewing the latest economic studies that showed the many financial hardships that seniors are facing today, including shrinking savings, rising number of those now living below the poverty line, and the fact that there will be no Social Security cost of living increase this year.

The article spotlights a senior by the name of Mike Griske who is 62. Mr. Griske did an analysis of the commodities tracked in the Consumer Price Index (CPI) as this is the index used by the government to adjust Social Security benefits. Mr. Griske’s objective was to demonstrate, irrespective of what this monthly key index indicates, that prices in the real world are rising and they are rising faster than his income.

The article concluded that for many senior homeowners, the reverse mortgage is an effective way to generate additional income for those seeking to avoid financial hardships. Additionally, the article examined the reasons why reverse mortgages are under used as well as offering advise on what to look for when considering a reverse mortgage.

All things considered, the article was filled with praise for the under utilized and frequently misunderstood program.

On occasion, I see inaccurate reporting and that angers me. It angers me because I know the truth and the truth is that, for many senior homeowners, a reverse mortgage can be life changing.

Even when the media does a good job reporting the facts, they are only able to devote a few lines of print or 90 to 180 seconds of television news time to a very complex issue. That is simply not enough time to provide the reader or viewer with sufficient information on which to make an informed decision.

Therefore, I take my hat off to AARP on their 26 minute webcast entitled “Reverse Mortgages – A Rescue or a Trap?” The webcast encourages viewers to take a balanced, informed, and objective view of the reverse mortgage strategy.

Their report covers the key questions seniors should ask when evaluating reverse mortgages along with information on the built-in consumer protections and abuse avoidance that are part of the program.

The report was done in an interview format with a rather diverse cast of characters; two politicians, a reverse mortgage industry spokesperson, a member of the media, and a consumer advocate.

One very interesting point that was raised was a discussion of a recent AARP survey showing that 93% of seniors who opted to take a reverse mortgage were pleased they elected to go forward.

When nine out of ten people can agree about anything, that’s newsworthy.

So, you now must wonder, with all that has occurred with our economy and, most specifically with house values, can you still count on your home to “finance” a reasonable portion of your retirement?

Here are my thoughts on that question. Your home is probably still your most valuable asset. While its value has fallen, I suspect that the rest of your investment portfolio is off the highs of 2005 as well.

Since your home is, no doubt, your most valuable asset, I believe that integrating that asset into your overall retirement plan is smart and, for many, probably necessary.

Once you have paid off or substantially paid down your mortgage, you will own a very valuable asset. More importantly, you will have given yourself the gift of having options. Option one is to sell, invest the proceeds, and live off the proceeds for the remainder of your life. Keep in mind that sales costs, like real estate commissions, miscellaneous selling costs, and title insurance could consume up to ten percent of the sales price of your home. This still may be the best option if you intend to downsize.

Combining that strategy with the new Reverse Mortgage for Purchase program could be an excellent choice for those seeking to downsize or relocate. Be sure to consult with a reverse mortgage professional to get full details on the new reverse mortgage purchase program.

Option two is the reverse mortgage strategy on your current home. Money from a reverse mortgage can be used to payoff your current mortgage, eliminate debt, and to provide a monthly income you cannot outlive. As long as you are alive and continue to live in your home, a reverse mortgage does not need to be repaid.

You will be required to maintain your home and continue to pay your property taxes and insurance.

Reverse mortgages are more expensive than traditional real estate loans but all the costs can be financed as part of the reverse mortgage. Using your home as part of your retirement plan, I believe, makes sense in the volatile and difficult to predict financial climate in which we now live. However, a reverse mortgage should represent only a portion of your income in retirement. A reverse mortgage is a supplement to, not a replacement for, a reasonable portfolio of tax deferred and taxable investments.

For more information and to design a strategy to meet your specific needs and objectives, consult a financial and reverse mortgage expert.

It is especially troubling that an increasing number of homeowners facing foreclosure are our seniors. What is even more troubling is that many senior homeowners facing foreclosure are totally unaware of a potential solution.

So, in the mire there is a ray of hope for some senior homeowners in or near foreclosure. That ray of hope is the reverse mortgage. Senior homeowners who have a reverse mortgage need never be concerned about foreclosure or whether or not they will always be able to meet their monthly mortgage obligation. They need not worry because those with a reverse mortgage have no monthly mortgage payment.

Those with a reverse mortgage can remain in their homes for the remainder of their lives. They only need to keep up the house, pay their property taxes, and home insurance.

If you or someone you know is in foreclosure, nearing foreclosure, or just behind in their mortgage payment, you should know that the “ray of hope” is still available. To qualify, homeowners must be over 61, reside in the home, and cannot currently be in bankruptcy.

So, if you or someone you care about needs to consult with an expert, suggest the Reverse Mortgage Coach.

NRMLA is the national voice for reverse mortgage lenders, reverse mortgage loan servicers and investors engaged in the reverse mortgage industry. The primary missions of NRMLA are to educate consumers about the pros and cons of reverse mortgages, train lenders to be sensitive to the needs and expectations of senior homeowners and to aggressively enforce the Association’s Code of Conduct. It is the Association’s last focus that I most appreciate. I advocate that ethics is everything. The recent conference in San Diego emphasized this value very clearly.

As I reflect back on those three days in that beautiful city, some points continue to resonate in my head.

Based on the highly supportive comments of HUD’s Meg Burns and Michael Stolworthy, HUD considers NRMLA to be an ally, not an adversary. Working together we have forged new laws and procedures to protect seniors while building an industry that can remain healthy during these trying times.

Meg Burns, who was one of the conference’s keynote speakers, is the Director of the Office of Single Family Program Development at FHA. In her position, she is responsible for the development and implementation of all FHA single family loan programs, including HUD’s reverse mortgage program.

Michael Stolworthy, who also delivered a major address at the conference, has been a special agent with the US Department of Housing and Urban Development (HUD) since 1999. Mr. Stolworthy is currently a member of the National Mortgage Fraud Team.

Both Ms. Burns and Mr. Stolworthy are big supporters of the HUD reverse mortgage program. During their presentations, both HUD representatives complimented NRMLA for their efforts to help seniors make smart choices through education. Mr. Stolworthy remained at the conference for the entire event, attending most educational sessions. I thought that this said a lot about the man and the nature of his relationship with NRMLA.

This annual event is, for me, a must attend conference and it is likewise a must attend for all professionals who are serious about this business. For me it is also a great opportunity to meet new colleagues and to renew longstanding relationships. However, I attend every year in order to learn and to grow in my profession.

All of the educational sessions were outstanding. However, here is a list of those I most enjoyed and those from which I received the most useful insights.

Ethical Issues and Business Practices for Reverse Mortgage Lenders – This informative class was conducted by NRMLA President Peter Bell and General Counsel James Brodsky. The emphasis was doing what is right and in the best interests of the senior homeowner.

Strategies for Persuading a Bank to Accept a Short Pay-off – This is a sad commentary regarding the times in which we live. Nevertheless, reverse mortgage professionals can play a role in helping seniors retain their home when their efforts fail.

Coping with Change – What is Waiting in the Wings? – Much is occurring right now in the reverse mortgage sector and some of it is not so good. This session discussed legislative and regulatory trends, the secondary market for reverse mortgages, public perception of the program and NRMLA’s position and responses.

Spotting Elder Financial Abuse – Most cases of elder financial abuse are not perpetrated by businesses but by family members. This session was a panel discussion consisting of gerontologists who helped the attendees recognize when a client is being victimized.

A Reverse Mortgage That’s Closed is Not Yet Finished – This session dealt with what happens after a reverse mortgage is funded. The session focused on post-closing responsibilities that are ours and our clients. The emphasis was on remaining current with taxes and property insurance. It also covered disbursements and loan termination.

A Reverse Mortgage is Just a Piece of the Financial Pie – This workshop focused on the merits of incorporating a reverse mortgage into a senior homeowner’s comprehensive financial plan. The panel consisted of financial planners and geriatric care managers. NRMLA’s Peter Bell provided his thoughts on the circumstances in which a reverse mortgage is an appropriate piece of a financial planning strategy and how it should be integrated into an existing financial plan.

What You Need to Know About Counseling – Counseling is a critical component of every reverse mortgage. This presentation was a discussion among several experienced counselors. The session highlighted HECM protocols and demonstrated what occurs during the typical counseling session.

Moving Along – Aging in Place – This session talked about the advantages of a senior support network. Seniors need to know where to seek answers to their problems. NRMLA members are encouraged to see this as one of their “obligations.”

These were my conference high points but there were many other high points as well. Therefore, this blog is but a sample of what occurs at our annual conference and at the four regional sessions each year.

What is taught and emphasized at these meetings underscores why I am so committed to NRMLA and why I believe that those who are considering a reverse mortgage consult only with NRMLA members. NRMLA members originate almost 90% of all reverse mortgages so membership is the litmus test that separates the professionals from the pretenders.

 Many of you have “purchased” many mortgages over your years of home ownership.  It may have been a mortgage to purchase a home or, perhaps, you have refinanced an existing home.  I suspect that some of you have refinanced many times and the way you went about it each time and the questions you asked each time were no doubt identical.  They are conditioned behaviors.

 So now you are thinking about a reverse mortgage and, after all, it is just a mortgage so you should evaluate this “new” mortgage just as you have done so many times over so many years, right?  Since a “mortgage is a mortgage” all you need to consider are rates and fees, correct?

 Unfortunately, this is the strategy and conditioned behavior of many reverse mortgage “shoppers” and the end result using this approach can be disastrous. 

 However, with a reverse mortgage, the single most important questions are – tell me about your experience and your qualifications as a reverse mortgage specialist.  You are seeking an advisor, not someone to “take your order.”  You are seeking an advisor who can help you make an informed decision now and one who can help you structure your reverse mortgage to meet your current financial situation.  You should also be seeking a professional who will be there for you in the future. 

 Ask the right questions and get references.  Above all, don’t fall into the trap of using old behaviors to make new decisions.

 Our congressional leaders and the White House have dealt out billions of dollars to major corporations.  At the same time, they have done little to help individuals, especially seniors.

 For the next two years, perhaps longer, Social Security recipients will not receive a cost of living increase.  In prior blogs, I have aired my frustration with Congress and their refusal to subsidize the HUD reverse mortgage program.  In so doing, Congress has forced HUD to deliver a 10% haircut to the benefits available under the HUD reverse mortgage program. 

 Since the inception of the HUD reverse mortgage program in 1989, HUD has made over $9 billion by providing their mandatory HUD mortgage insurance (MIP).  Therefore, it seems fair and reasonable that our lawmakers could have easily seen fit to provide the $800 million subsidy requested by HUD.  An $800 million request on a program that has brought in $9 billion seems like a “no brainer” even for our leaders on Capital Hill.

 Seniors are often told that they don’t need a reverse mortgage because there are other options.  Selling is one option but in this market is that really a viable one?  How many seniors will be forced to ask family for support or draw down on their retirement accounts until there is no more?  How many seniors will be forced to witness their home of many years fall into foreclosure? 

 We see the tea parties on TV, we have witnessed the demonstrations over federal spending that is out of control, and we hear about the irresponsible actions of the “Congressional gang” that appears to believe that the solution to all our ills lies in spending money that we no longer have.  I see the moral outrage building and it is only a matter of time before our senior population declares that they “are mad as hell and aren’t going to take it any more.”

 Perhaps the off year election of 2010 will give us the opportunity to usher out the many lawmakers who consistently vote against our senior population.