Reverse mortgage myths persist despite industry education efforts

"Longbridge said there are persistent and false beliefs that senior homeowners do not retain the title to their home after signing a reverse mortgage agreement. As with any mortgage, borrowers remain responsible for meeting loan obligations, like keeping current with property taxes, homeowners insurance and maintaining the property, the company's release stated. The lender places a lien on the home, as with a traditional forward mortgage, which allows the loan to be repaid when it becomes due."

"Similarly, some consumers still believe their lender will take the home when they die. While foreclosures happen in these situations, inheritance is allowed, if the heirs choose to repay the loan. Importantly, heirs are never responsible for the debt owed, which can never exceed the value of the home. Because reverse mortgages are non-recourse loans, they will never owe more than the home is worth at the time of sale, the company explained."

"But Paul Fiore, vice president of sales and branch production for HighTechLending, recently told HousingWire's Reverse Mortgage Daily that the product suite should be framed as just another tool in your retirement belt. How does it affect someone's everyday life? Fiore asked. I'm showing you a five-year or 10-year plan with a reverse mortgage, and how it's supplementing your situation, so you're not worried about the cost of goods and other things happening around you."

Persistent false beliefs claim senior homeowners forfeit their home title after signing a reverse mortgage, but borrowers retain title and remain responsible for property taxes, homeowners insurance and maintenance. Lenders place a lien similar to forward mortgages to enable loan repayment when due. Heirs may inherit by repaying the loan, and heirs are never liable beyond the home's value because reverse mortgages are non-recourse loans. The product is being repositioned as a retirement planning tool rather than a last-resort option, with representatives framing five- or ten-year plans that supplement income. The HECM program includes mandatory counseling, financial assessment and limits on initial withdrawals; HUD sought comments on counseling improvements.

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