During my time reporting for Reverse Mortgage Daily, I’ve talked to countless brokers, lenders, counselors, and others in the industry to gain knowledge of reverse mortgages—what they are and whom they impact. Even though I’ve heard numerous times about the involvement of family and the complexities that involvement can present, it took witnessing the dynamics of my own family’s experience to learn how complicated matters can get.
On a Sunday afternoon, two weeks before Christmas, I went to my grandma’s house for a holiday luncheon. My grandmother and aunt (who lives with my grandmother) had just finished preparing our meal, and we were sitting around the kitchen table.
“What is it that you write about again?” my grandma asked about my relatively new job.
I explained that I wrote for Reverse Mortgage Daily.
“Oh, reverse mortgages, Robert Wagner is always trying to get your grandma to get one of those, hm, Mom?” my aunt said.
“A reverse mortgage?” my grandma looked up from her spaghetti. “I got one of those.”
I leaned back in my chair as my aunt processed this piece of information. “What? I thought you just had a line of credit!” she protested.
Yes, Grandma does have a line of credit, but not a traditional HELOC like my aunt had figured.
“It’s great. I don’t need to use it all the time, just once in a while. Like for Christmas gifts for [the grandkids],” my grandma said. “[My sister] got a lump sum reverse mortgage, I think, but I don’t need all that money.”
Why exactly my aunt reacted the way she did isn’t exactly clear and it wasn’t something I wanted to bring up at the dinner table right then.
But a couple of weeks later when I was visiting my family back home in Pennsylvania for Christmas, I asked my dad how he felt about it. His reaction was more neutral, or even positive: it’s her home equity, and it’s hers to use as she sees fit.
Back when I had first heard about reverse mortgages, the concept of not being able to leave the home to heirs seemed outrageous, but my dad’s right—it’s not like children are entitled to an inheritance.
As for my aunt, I’m not sure if she understands what exactly my grandmother’s reverse mortgage means for her. Does my aunt know that once my grandmother leaves the house, she won’t be able to live there, unless she can pay back the loan?
It just goes to show: when a borrower takes out a reverse mortgage, there’s often a ripple-effect for the entire family.
My family’s story seems to be a perfect case study for reverse mortgages, featuring the satisfied borrower, the dissenting adult child, and the supportive adult child.
Even though it is ultimately the homeowner(s)’s decision to take out the loan, this choice can affect multiple other people. But how is the industry supposed to handle this? Should everyone living with the borrower be required to get counseling, or does that overstep boundaries? True, non-borrowing spouses and other residents are supposed to sign a form that they’re aware they won’t be allowed to assume the reverse mortgage upon the borrower’s death, and that the loan will become due and payable upon the borrower’s death. But this doesn’t necessarily resolve the problems that could arise.
There’s no question that this can be a very complicated issue, and at the same time… there doesn’t appear to be an easy answer.
In a perfect world, family members of reverse mortgage borrowers should also have access to education on the loan and its implications. In the long run, however, it is the borrower’s decision to make.
While I understand my aunt’s point of view, a reverse mortgage’s benefits are intended for the borrower—not necessarily for the borrower’s friends or family. In my family’s particular situation, my grandmother is happy with her decision, and at the end of the day, that’s what matters.
Written by Alyssa Gerace
This edition of RMD Report is brought to you by Landmark, a leading national appraisal management and compliance company serving the reverse mortgage lending industry.
