Once Financial Assessment is complete, some clients may be required to set aside money upfront before they receive the proceeds from their reverse mortgage to cover future obligations. This means they will receive fewer proceeds at the closing table. While this could discourage some future clients from looking into the program, it opens up the door to many people who have never been candidates for the program before.

Positive Change
While some may see this as a downside of the reverse mortgage program, we need to ensure clients understand that this is an upside that will benefit them in the long run. Financial Assessment gives the overall reverse mortgage program more stability than it had previously because it adds another level of protection for the client. Financial Assessment helps the client plan for

the future costs associated with homeownership that include paying for

taxes, property insurance and maintenance of the home. It gives seniors in all financial brackets the opportunity to consider, or be a candidate for, a reverse mortgage, even those who may never have been able to consider the program before.

Financial Assessment is not a new mortgage industry standard. In fact, the Federal Housing Administration has been performing financial assessments on its loans for more than 20 years. The reverse mortgage program is just catching up to include this requirement for potential clients.

Changing Perception
It’s our job to educate not only clients, but also financial advisors, about the changes and highlight them as positive improvements. We need to clarify that the new policies are in the clients’ best interests, designed to help them succeed financially with the reverse mortgage loan.

Changes in the overall perception of the program are already starting to take root. Recently, the Journal of Financial Planning referred to the reverse mortgage program as a “comprehensive approach to personal financial management for retirees” instead of calling it a “last resort” option. While this is a small victory for our industry, I’m sure that we’ll start to see more people changing their preconceived perceptions of the program.

Position for More to Succeed
Financial Assessment is an important change to our industry and should be considered a healthy step in the right direction for the future of the reverse mortgage program. We now have the ability to put every client in a position to succeed financially today and for years to come.