The HECM Spin on Retirement

JUNE 18, 2019 BY CARMEN ALTAMIRANO, HECM MARKETING MANAGER – HECM EDUCATION IN PRODUCT, EDUCATION

The HECM Spin on Retirement

When it comes to Reverse Mortgage, the offerings of old have evolved toward what’s provided anew via the Home Equity Conversion Mortgage—also known as HECM.  Rare is the case to have perfected, a model that’s been fully structured and operating out of in its initial phases. The Reverse program underwent careful sowing to see realized a fully grown, working fruition.

A look back to the first reverse transaction:

In 1961, reveals evident the program’s survival through the test of time.¹ The original vision for a better Reverse is what continually led its authors back to their drawing boards. And for decades, much effort went into the production of a uniquely great lending model that would allow for a work-in-progress malleability.

An unfortunate reality presented itself through the disappointments of past borrowers and their families. Detrimental outcomes, resulting from poor regulation, left a sticky reputational residue that was difficult to shake.  In theory, the Reverse had proposed a solid, viable retirement option; in reality, it under delivered a lifespan practicality. The post-Reverse, ‘non-recourse’ HECM, has stricken from the record a grandfathered fear: ‘that by outliving one’s predetermined expectancy, eventual home loss would ensue.’

The HECM is not solely a desperate last means to some needed ends, nor a ‘second hand’ approach to a secured retirement. However, the protections and oversight imposed through 2017’s regulation overhaul, created for need-based and savvy borrowers alike, a security to explore the HECM’s reformed offerings and advantages. What’s now obtainable is a custom-friendly retirement option that’s increasingly accommodating elders of all circumstances.

Is there an ideal HECM candidate?

Many would be surprised to discover that there isn’t a uniformed nor characterized ideal when it comes to the HECM borrower demographic. The HECM’s advantage benefit applies to a range of borrowers on several fronts. The old narrative pegged the HECM as merely a needs-based, last resort loan—at best, this only attributed to the program a half-truth of justice.

While the HECM and its products certainly offer financial relief potential to many struggling seniors, the flip side of the same coin proposes to borrowers a financial planning tool. HECM candidates at large can choose a tailored program based upon their individual needs, desires and financial positioning.

Who is a HECM Candidate?

• • Seniors aged 62 or over.
  • Seniors on a fixed income looking to supplement income gaps.
  • Affluent and/ or financially savvy seniors looking to maximize their resource(s) benefit.
  • Seniors seeking to Age in Place while enjoying a ‘No Mortgage Payment’ Living Flexibility.
  • Seniors Interested in a ‘Line of Credit’ (LOC) Emergency Cash Access Back-Up Plan.
  • Seniors desiring a ‘Right Size’ move adjustment into a new home.

What type of HECM product(s) options are available to eligible Seniors?

• • HECM Loan/ Line of Credit — Fixed and Variable Rate Options
  • HECM for Purchase
  • HECM Refinance

The new HECM reality is gradually paving the way toward greater consumer awareness and interest.  And it’ll be only a matter of time before retirees begin to believe in the value of mortgage return, where they’re able, with confidence, to convert their largest assets into income. *

Sources

1. Source: ”A History of Reverse Mortgages.”

https://www.reversemortgages.com/infographics/reverse-mortgage-history

* Borrower responsible to maintain property taxes, insurances and upkeep.