Financial Planner: Reverse Mortgages Can Offer Path to Retirement ‘Paycheck’

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          Financial Planner: Reverse Mortgages Can Offer Path to Retirement ‘Paycheck’

Managing finances in retirement can be difficult for a senior, most especially if someone is already strapped for cash. That makes the possibility of regular cash flow in addition to pre-existing benefit programs very attractive, and reverse mortgages can offer some seniors a viable path toward just such a path.

This is according to a new article appearing at NerdWallet written by Certified Financial Planner and author Liz Weston.

“Your expenses don’t end when your paychecks do, but creating a reliable income stream in retirement can be tricky,” Weston writes. “The right choices can result in sustainable income for the rest of your life. The wrong choices could leave you uncomfortably short of cash.”

While the first and most prominent recommendation revolves around maximizing Social Security benefits by deferring payments until age 70, finding other sources of guaranteed income can also help achieve a senior’s retirement financing goals.

“Ideally, fixed expenses in retirement would be covered by guaranteed income, such as Social Security and pensions, so that your basic lifestyle isn’t jeopardized by stock market fluctuations,” Weston writes.

Citing finance researcher Dr. Wade Pfau, two paths that could help create more guaranteed income could be an income annuity or a reverse mortgage.

“Another option could be a reverse mortgage, a loan that can convert some of your home equity into a stream of monthly checks,” she writes. “If you have a lot of equity but still have a mortgage, a reverse mortgage could pay off your loan and eliminate those monthly payments.”

Other tips to help retirees stabilize their finances in their post-working years include leaning on traditions like the “4% rule,” which financial advisors often suggest and which involves withdrawing 4% of your portfolio in the first year, before adjusting the amount for inflation each following year. Historically, this strategy has lowered the risk of depleting finances, Weston writes.

“Some planners, however, worry that 4% may be too high given current low interest rates and high stock valuations,” she adds. “The ‘Spend Safely in Retirement’ method, which [Stanford researcher Steve] Vernon created with the help of the Society of Actuaries, recommends using annual withdrawal rates based on the IRS’ required minimum distribution rules.”

Still, creating a “retirement paycheck” is often only a first step to preparing for finances in retirement. For instance, emergency funds for unexpected expenses will still need to be allocated, and retirees are also encouraged to make plans for other necessities like long-term care in the future, Weston says.

Courtesy of Liz Weston, Nerd Wallet

fair housing logoShawna McDonald, Reverse Mortgages Only Loan Officer has specialized solely in reverse mortgage loans for 11 years and has successfully completed hundreds of them. Approved with 10 of the largest reverse mortgage lenders in the nation, including AAG (American Advisors Group). She is available by appointment; her local office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main St. Suite N, Grass Valley, (530) 497-3010. Her website is NMLS #271335 DRE #00585530 Borba Investments, Auburn, CA Company NMLS #76801 DRE# #01386892

Reverse Mortgage Loan: The Key to Aging at Home; With The Right Home Modifications You Can Avoid Assisted Living Placement and Age in Your Home

home modifications

Gracefully Aging in Your Home with Modifications is Made Possible with a Reverse Mortgage Loan 


As aging in place becomes increasingly preferred among seniors, those who may have some trouble paying for necessary home modifications to make the process easier may find a possible path forward through a reverse mortgage loan. This is according to a new column appearing in Bankrate.

A majority of Americans over the age of 50 prefer to remain in their homes as they age, according to a 2018 survey conducted by AARP. Aging in place has taken on added importance in light of the COVID-19 coronavirus pandemic, as nursing homes and assisted living facilities have struggled to contain the virus. For those interested in aging in place, making certain types of home modifications can help seniors to save money, according to DeDe Jones, a certified financial planner and managing director of Innovative Financial in Lakewood, Colo.

“What not everyone considers is that you can save money by doing the right home modifications,” says Jones to Bankrate. “The longer you can safely live in your home, the less you will need to pay for assisted living care, something that is not cheap.”

Examples of the best kinds of home modifications to facilitate aging in place include adding ramps to doorways, removal of trip hazards like carpeting or molding, having the master bedroom or suite on the first floor of the home, adding a bench and/or walk-in access to a shower, ample grab bars and railings, and easy-to-grip doorknobs.

In addition to typical financing options like a home equity loan, home equity line of credit (HELOC) or a specialty home improvement loan, a reverse mortgage can present a distinct opportunity to help a senior pay for necessary home modifications that will allow them to stay in their home.

“If you’re 62 or older and own your home, you may be eligible for a reverse mortgage, which converts a portion of your equity to cash while allowing you to continue living in the home,” writes Bankrate’s Jeanne Lee. “One of the most common kinds is a Home Equity Conversion Mortgage (HECM).”

In terms of the timing of home modifications, a lot of the necessity will depend on the senior’s specific situation, Lee writes.

“Getting older is a process, so it’s likely you’ll need to adapt your home more than once as your needs change,” the column reads. “You can add home modifications gradually or all at once, if finances allow. Sometimes it’s cost-effective to add aging-in-place home modifications as part of other planned renovations, such as building an addition or remodeling a kitchen.”

Seniors should also keep in mind that new assistive technologies are being developed and released all the time, so staying on top of additional and emerging ways in which aging in place could be made easier may be beneficial.

Excerpted from Reverse Mortgage Daily


fair housing logo Shawna McDonald, Grass Valley and Nevada City Reverse Mortgage Loan Officer, for 12 years has specialized exclusively in reverse mortgage loans & has successfully completed hundreds of them, representing 11 of the LARGEST reverse mortgage lenders in the nation, including American Advisors Group, (AAG) giving you the ability to shop for great rates with one stop shopping at her office or on the phone. She is available by appointment in her downtown Grass Valley office for a no-obligation consultation OR DURING COVID she can complete your loan by phone and email. Sierra Foothills Reverse Mortgage (530) 497-3010  NMLS #271335 | CalDRE #00585530 Borba Investments Inc. Company NMLS 76801 |Company CalDRE # 014461


For Reverse Mortgages, Financial Disaster Equals A Financial Buffer

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The COVID-19  pandemic has wreaked havoc on many industries indiscriminately, from energy to food service and seemingly everything in-between. While the expectation would be that the reverse mortgage industry would pivot and maneuver through this time based on its response to past crises, what’s actually happening goes beyond that: this pandemic seems to actually be helping the business.

Since mid-March, more than 44 million Americans have applied for state unemployment benefits, the largest figure in history. An additional 1.5 million people filed for benefits last week, according to the Labor Department. The stock market has been on a turbulent ride, with historic losses posted in March, many of those same losses recovered in May, and yet another steep drop being observed late last week.

These are all undoubtedly negative occurrences for American households, but they actually seem to be creating interest and — more importantly — activity for the reverse mortgage industry. Because of the economic impact of the virus and the already shaky ground on which senior retirement sits in the United States, reverse mortgage products and the professionals who offer them are finding themselves consistently busy as more Americans try and find new and novel ways to solidify their financial standings.

That initial disorientation related to the steep drops in the stock market gave way by even early April to a corps of reverse mortgage loan officers who have found ways to adapt to current economic conditions, and position the reverse mortgage as a possible solution. Loan officers in places like Colorado and Maryland  in April report that referral business had seen a noticeable spike, up to and including some partners who had gone back to the loan officers because of the new situation created by the pandemic.

Based on conversations with these loan officers, it looks like what has happened is that previous potential clients who at one point decided against getting a reverse mortgage have now seen their circumstances change. With that change in their own situation has come the realization that a reverse mortgage product is now better suited to help them through a tough time.

Regulation, and the necessity for the product

The industry’s chief governing body, namely the Federal Housing Administration (FHA) and Department of Housing and Urban Development (HUD), have also stepped up to make sure that the reverse mortgage product is available to serve people in the ways they need service. The government has allowed for relaxed appraisal requirements requirements.

This has created some additional surprise on its own: the continuous flow of regulation and intervention on the part of the government is often a cause for anxiety and difficulty on the part of the reverse mortgage industry, since compliance anxiety often results from changes handed down by the government. In this case, though, the government’s intervention has made for a much easier time for the industry, streamlining and simplifying the way that people can originate and close reverse mortgage loans.

Relevance for the reverse mortgage product category is also bolstered by the fact that major financial institutions have halted their own Home Equity Line of Credit (HELOC) offerings, starting with JP Morgan Chase in mid-April and growing to encompass Wells Fargo by May. The exits of those institutions has only strengthened the stance of reverse mortgage companies who provide stand by credit line similar to HELOC”S but with the added advantage of no monthly mortgage payment required.

These factors have led reverse mortgage industry participants have transitioned from a perspective of overriding caution to one of general optimism. In mid-April, LOs across the country found themselves very nervous about what social distancing and other virus mitigation efforts might do to their ability to conduct business with senior clientele, with a California originator advising colleagues to “prepare for the worst.”

Now, many of those same originators are finding themselves busier than they’ve ever been all year, with a favorable rate environment enhancing benefits for borrowers and added interest in proprietary products coming from the current economic situation. Many loan officers I’ve spoken with have told me — both on-the-record and off — that things like referral partnerships and loan pipelines are as large as they’ve ever been, precisely because the product is there as a tool for seniors to weather financial shocks like this one.

Fulfilling a promise

It’s not exactly a good idea for the reverse mortgage industry to market to people how it has managed to profit off of a crisis that is afflicting millions of Americans, but at the same time, the truth of the matter is that this is why reverse mortgages exist in the first place. In an environment where seniors’ retirement futures have already been put at risk by dwindling savings and disappearing pensions, the idea of the reverse mortgage is to allow a senior to use the equity in their home to either meet necessary expenses in old age, or to enhance their quality of life in retirement.

Since this crisis has had a major negative impact on both the physical and financial health of seniors, the fact that this product category is around and providing some necessary relief for those who have been adversely affected by a widespread economic downturn should be an encouraging development for the industry, since it is fulfilling both its stated purpose and promise.

Keeping up with all the dimensions of news — from new business practices to swings in industry metrics like endorsement data — that the pandemic has revealed for the industry has been dizzying. Considering how much the general tenor of conversation has changed with people at all levels from boots-on-the-ground loan officers to chief executives, it has emphasized just how resilient the industry remains, while also illuminating that for American seniors, the reverse mortgage product is well-suited to serve as a tool to solve some of their financial problems.

Of course, what the industry does with these circumstances in the end will be anyone’s guess. As of right now, though, more people are both talking about and acting on the opportunities that can be presented by the reverse mortgage product category. The relevance and even necessity for some to explore reverse mortgage options has been present throughout the crisis, and has been further highlighted because of seniors’ need for additional stability.

By Chris Clow, Reverse Mortgage Daily, edited for brevity


Shawna McDonald, Reverse Mortgage Loan Officer, for 12 years specializing exclusively in reverse mortgage loans & successfully completed hundreds of them. When you work with me you get the advantage of local loan representation, promptly returned phone calls and I represent 11 of the largest reverse mortgage lender in the nation guaranteeing you great rates!  I remain with an office in downtown Grass Valley but offer,   due to COVID, the service of completing loans by phone, mail, and email.  Call today for info ! Sierra Foothills Reverse Mortgage (530) 497-3010. NMLS #271335 | CalDRE #00585530 Borba Investments Inc. Company NMLS #76801 |Company CalDRE # 014461


During Virus Crisis Financial Planners More Receptive to Reverse Mortgages

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Reverse Mortgage Loans Now Being Started and Completed by Phone from the Comfort of Your home. Call My Office Line to be Instantly Transferred to me for a Phone Consultation:  530-497-3010  Shawna McDonald, Reverse Mortgage Loan Officer, Grass Valley, Nevada City, Penn Valley

Here is a Timely Article:

During Virus Crisis  Financial Planners More Receptive to Reverse Mortgages

A survey of approximately 230 financial planners during a Mutual of Omaha Mortgage and International Retirement Resource Center webinar hosted by Dr. Wade Pfau late last week revealed that 77% of financial planner respondents are more receptive to offering reverse mortgages to their clients in light of the stock market volatility introduced by the ongoing issues of the COVID-19 coronavirus pandemic. This is according to Dr. Pfau, who shared the results of the survey with RMD.

Additionally, reverse mortgage borrowers have increased the levels of their draws from their reverse mortgage lines of credit recently, according to data shared by Celink chairman and CEO Robert Sivori during a “town hall” webinar conducted by the National Reverse Mortgage Lenders Association (NRMLA).

Reverse mortgages have often been cited by those receptive to their use in the financial planning community as viable products that can be used to avoid sequence of returns risk, where a hypothetical borrower instead chooses to draw on the reverse mortgage while their investment portfolio endures volatility due to the conditions of the stock market.

Market concerns driving receptivity

In the webinar hosted by Mutual of Omaha Mortgage with the International Retirement Resource Center, “Best Practices for Retirement Income,” many different elements related to retirement financing were discussed including the difference between the accumulation and distribution phases of retirement planning and understanding retirement risks in the current climate. The webinar was planned prior to the outbreak of the coronavirus, but had added relevance to the retirement conversation in light of the pandemic.

In regards to the response to reverse mortgages, Pfau discussed what reverse mortgages could bring to a retirement portfolio but polled his audience of financial planners about their receptivity to them well before he actually began the reverse mortgage segment of his presentation.

“The webinar covered many different topics, and we asked the question before I discussed reverse mortgages,” Pfau tells RMD. “I was a bit surprised that the number [of receptive financial planners] was so high.”

Much of this reverse mortgage receptivity is likely fueled by the anxieties currently inherent in financial markets. The market has continued to exhibit volatility even in spite of additional unprecedented action on the part of the Federal Reserve, which said it would buy as much federal government-backed debt as it needs to in order to ensure that financial markets continue to function, according to the New York Times.

The current market volatility likely creates even more concerns on the part of people who are at or near retirement in the current climate, so those who manage the assets of people in this situation are likely looking at more options to protect portfolios, Pfau says.

“I think there is a lot of concern about the impact of these market declines and the low interest rates on near retirees,” Pfau says. “And so, we are seeing more advisors being willing to consider ‘outside the box’ thinking to address these challenges.”

Additionally, Pfau’s work on reverse mortgages was also recently cited by Jeffrey Levine, CFP and director of advisor education for, when discussing that a reliable source of capital for a senior in times of financial stress can often be the home.

“Notably, there are a variety of ways in which homeowners may be able to unlock some of the equity in their homes,” Levine writes. “For instance, spurred on by research, including that conducted by Wade Pfau, some planners have encouraged eligible clients to secure line-of-credit style reverse mortgages on their home to help mitigate sequence-of-return risk and to avoid selling assets during significant market drops (like this one!).”

Reverse mortgage, LOC draws increase

When briefing industry professionals on patterns observed in reverse mortgage draw activity, Celink chairman and CEO Robert Sivori asked for a quick report on borrowers’ activity in drawing from their reverse mortgages, and related that there was an increase in activity of over 50%.

“Week over week, if you look at the week ending [March] 13 versus the week ending March 20, we saw a 55% increase in the number of draws, it went to 1,055 draws,” Sivori said. “From the previous week, it was 720. And then the increase in the size of the draws […] we had a 14% increase. It was 8.7 million as of last Friday. The previous week and before that, it was 4.9 million. So, [the size of the draws has almost doubled].”

Draws on reverse mortgage lines of credit have also seen notable increases, Sivori said.

“And then we also are seeing […] some line of credit draws, the standby lines of credit, where some borrowers who had no balance or very little balance, maybe just the closing costs were on there — $3,000 — that did a full draw of $615,000 on that and they’re using it the way it was intended to be used,” Sivori said. “And by the way, these numbers fit January over February, as well. So, it’s been an increasing slope here on the draws being pulled down.”

Reprint from RM Daily’s Chris Clow 3/30/2020

fair housing logo    Shawna McDonald, is Grass Valley’s ONLY Licensed Reverse Mortgage Specialist Loan Officer.  She has specialized solely in reverse mortgage loans for 11 years and has successfully completed hundreds of them. Approved with 10 of the largest reverse mortgage lenders in the nation, including AAG (American Advisors Group). She is available by phone appointment during our current crisis, loans can be completed remotely by phone from your home. Post crisis her local office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main St. Suite N, Grass Valley, by appointment only. (530) 497-3010. Her website is NMLS #271335 DRE #00585530 Borba Investments, Auburn, CA Company NMLS #76801 DRE# #01386892


Wall Street Journal: Reasons Retirees Should Consider a Reverse Mortgage


According to Professor Benjamin Harris, executive director of the Kellogg Public-Private Interface at Northwestern University’s Kellogg School of Management, in a column at the Wall Street Journal, retirees should strongly consider employing a reverse mortgage loan to help fund their retirements, primarily because they can serve to protect against two major problems: falling home prices, and the increasing likelihood that a senior will outlive his or her assets.

While consumers have reason to be skeptical about the ways in which such a product can help them, Harris says, there is promise in using them to overcome specific issues in retirement that should not be overlooked.


“Reverse mortgages are […] one of the more promising ways to protect against both falling home prices and outliving assets,” Harris writes. “And they can be a lifeline for retirees with a lot of home equity and not much else.”

Also serving as a proverbial feather in the cap for the product is the nonrecourse feature, which will prevent a senior, in the majority of cases, from owing more than the value of the home.

“This nonrecourse feature is potentially worth a lot to homeowners, especially if they use it exclusively as protection against a falling value of a home,” Harris writes. “Under [a] ‘ruthless’ strategy (as economists have dubbed it), borrowers initiate a mortgage, but don’t actually borrow any money unless the value of their home falls. This way, borrowers only pay a few thousand in up-front fees, but cash in if their home’s value falls.”

Even for those who may not find any real appeal in this kind of strategy for their own situations, the potential benefits of a reverse mortgage loan when employed correctly should not be overlooked, Harris says.

“Reverse mortgages can be a valuable way to protect against a dip in home value—which is the primary asset for many retirees,” writes Harris. “And because homeowners can stay in their homes indefinitely (as long as they maintain it and pay their taxes), reverse mortgages can be a sound way to protect against outliving your assets—a bit like buying an annuity that pays your rent every month for as long as you live.”

Caveats to consider include the ability for a lender to foreclose if tax and insurance payments are not made, while interest rates are also “probably too high given the limited risk taken by lenders,” Harris says. The loans can also be “a poor choice” if a senior hopes to leave their home to their heirs, he says. Still, they can be an attractive risk mitigation tool nonetheless when employed in the right situation.

Reprint of article from Chris Clow of Reverse Mortgage Daily and the Wall Street Journal

fair housing logoShawna McDonald, Reverse Mortgages Only Loan Officer has specialized solely in reverse mortgage loans for 11 years and has successfully completed hundreds of them. Approved with 10 of the largest reverse mortgage lenders in the nation, she is available by appointment; her local office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main St. Suite N, Grass Valley, (530) 497-3010. The website is NMLS #271335 BRE #00585530 Borba Investments, Auburn, CA Company NMLS #76801 BRE# #01386892

Brookings Institution: Reverse mortgage products are economically justified “to play an expanded role in helping older Americans achieve a secure livelihood.”

Senior in a new home

Reverse mortgage products are economically justified “to play an expanded role in helping older Americans achieve a secure livelihood.” This is according to a new research paper released by the Brookings Institution, authored by researchers Martin Baily, Benjamin Harris and Ting Wang.

The paper, released last week along with two additional papers during a reverse mortgage event hosted by Brookings, serves as a framing device to give insight into the current climate exhibited in the reverse mortgage marketplace, while also helping to introduce ideas for possible reforms to the Home Equity Conversion Mortgage (HECM) program described in two additional research papers released at the same time.

The state of the marketplace

The evolution of American retirement has necessitated more seniors entering their post-working lives to take a more active role in retirement planning. This often leads to recent retirees lacking a sufficient amount of savings, while also having access to potentially substantial equity built up in their homes. Such an arrangement makes a reverse mortgage an appealing option for some seniors who are looking for sources of retirement funding, though some notable impediments exist that have kept the number of reverse mortgage borrowers generally low, the researchers say.

“In theory, reverse mortgages should be more than a niche product,” the paper reads. “Many older households are rich in home equity, but poor in financial assets—suggesting that accessing housing wealth could materially improve their standard of living. And reverse mortgages are consistent with economic theory dictating that households should accumulate wealth during their working years and spend down that wealth in retirement—with reverse mortgages being the only plausible way to access home equity without a regular payment and while continuing to live in the home.”

However, less than 1% of eligible homeowners avail themselves of a reverse mortgage, which researchers attribute on the demand side to barriers like high upfront fees, and borrower caution related to product complexity and the risk of foreclosure. On the supply side, there is risk in a reverse mortgage transaction for issuers due to the possibility of a borrower failing to meet tax and insurance requirements, as well as risk to the Mutual Mortgage Insurance Fund (MMIF) for the scenarios when the amount owed crosses over the threshold of a home that may have lost value.

‘Great potential’ for secure retirement

For the researchers who authored the overview paper, the reverse mortgage product and marketplace is not totally new territory but brings with it a surprising level of complexity. Still, reverse mortgages do contain a great deal of potential for retirees and should be more carefully considered, according to paper author Martin Baily, the Bernard L. Schwartz chair in economic policy development and a senior fellow in economic studies at the Brookings Institution. However, that doesn’t mean that they will necessarily catch on with retirees.

“Prior to writing the paper, I thought there was a great potential for the elderly to use this instrument to provide themselves with a more secure retirement,” Baily tells RMD. “Based on the research I still think that reverse mortgages are a useful vehicle for some households, and that improvements to the market (notably those suggested by our paper givers) could help expand the market.”

One of the reasons that the products may not end up catching fire with retirees is because of the levels of home equity remaining after some of the loan obligations are met, Baily says.

“After accounting for future property taxes, insurance and maintenance, there is often less home equity available than people had thought,” he says. However, that does not mean that people should necessarily be discouraged from examining reverse mortgages as a viable solution in retirement, at least for some people.

“This can become a reputable and valuable instrument for some, but it is not the choice for everyone,” Baily said when asked what a primary takeaway should be from the Brookings research.

A ‘visceral reaction’

Another author on the paper relates how strongly the idea of a reverse mortgage can elicit reactions from people, which often leads to the propagation of inaccurate information surrounding the products and the purposes they can serve. This is according to Professor Benjamin Harris, executive director of the Kellogg Public-Private Interface at Northwestern University’s Kellogg School of Management.

“I find that the mention of reverse mortgages often elicits a visceral reaction, as though the products are toxic and should never be considered,” Harris tells RMD. “And this often appears to be a misinformed position. For example, many of the costs related to reverse mortgages are actually to pay insurance premiums to government entities, and this insurance has been running in the red in recent years—suggesting that consumers are actually getting a subsidy.”

One of the issues related to reputational concerns is product complexity, which can be a formidable barrier to consumer understanding, even if a more complicated attribute could be beneficial, Harris says. Still, the industry as a whole still has to struggle through a history of bad actors, particularly as those are so easily noticed.

“People don’t understand the insurance aspect of these products, which can be a real benefit to some homeowners,” Harris says. “So, instead of being seen as a part of a retirement strategy, these are sometimes seen as a ‘last resort’ source of funds for desperate retirees. That, combined with some bad actors in the past, has probably hurt the reputation of the product.”

The reputation is also complicated by the fast-paced changes that the reverse mortgage product often goes through, which can add an additional barrier to understanding for consumers, Harris says.

“In general, these changes have been positive, but it’s also likely added to consumer confusion over the contours of the loan,” he says. “Perhaps more importantly, though, people do not seem to understand some of the key benefits to reverse mortgages: namely that they can help hedge against extended longevity or falling home prices. In many ways, they are more like an insurance product than anything else, and I don’t think people understand that.”

Courtesy of: Baily, Harris and Wang at the Brookings Institution.

insured financing annually,” the press release said.

fair housing logoShawna McDonald, Reverse Mortgages Only Loan Officer has specialized solely in reverse mortgage loans for 11 years and has successfully completed hundreds reverse mortgages. Approved with 10 of the largest reverse mortgage lenders in the nation, she is available by appointment; her local office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main St. Suite N, Grass Valley, (530) 497-3010. The website is NMLS #271335 BRE #00585530 Borba Investments, Auburn, CA Company NMLS #76801 BRE# #01386892

FHA Eases Condo Rules, Expanding Reverse Mortgage Market

Senior citizens written

Through a new rule announced Wednesday, the Federal Housing Administration (FHA) is making it easier for condo owners to get reverse mortgages and other FHA financing.

The FHA published a final regulation and policy implementation guidance this week establishing a new process for condominium approvals, effective October 15, which will expand FHA financing for qualified first time homebuyers as well as seniors looking to age in place, the Department of Housing and Urban Development said in a press memo.

“Condominiums have increasingly become a source of affordable, sustainable homeownership for many families and it’s critical that FHA be there to help them,”  a HUD representative said in a press release announcing the new rule. “Today, we take an important step to open more doors to homeownership for younger, first-time American buyers as well as seniors hoping to age-in-place.”

Reverse mortgage implications

This rule is being implemented partially in response to the demands of the housing market, and is aimed at including reverse mortgages for seniors who wish to age in place in a condominium unit, according to Acting HUD Deputy Secretary and FHA Commissioner Brian D. Montgomery.

“For seniors, part of our mission is to provide affordable options to age in place. Condominiums can make a lot of sense for many seniors [for reasons of affordability],” Montgomery said on a conference call with reporters. “Our single unit review now also includes reverse mortgages, known as Home Equity Conversion Mortgages (HECMs), designed to help seniors age in place.”

In a question and answer session with officials from HUD and FHA, the impact on the reverse mortgage market was additionally clarified in response to RMD.

“Due to the availability for HECM loans to be applied to the single unit approvals, I think that by introducing the single unit approval process, that’s going to provide an opportunity for all borrowers to utilize FHA financing to either acquire new homes, or if they are seniors, to age in place,” said Gisele Roget, FHA deputy assistant secretary of single family housing.

She also clarified that the previous rules governing condo approvals shut out a lot of senior condo owners from obtaining a HECM in the past, and this new rule will help to address that.

“We recognize that many seniors live in condominium projects that were unable or unwilling to go through the process of FHA’s project approval,” Roget said. “And so, by allowing HECM borrowers to utilize the single unit approval for HECMs, they will be able to age in place in condominium projects that do not have the overall FHA project approval.”

The ranges were also extensively deliberated internally by FHA, which can include HECM for Purchase transactions, added Commissioner Montgomery.

“Whether it’s HECM for Purchase or just purchasing a condo for a first-time homebuyer, we’ve spent a considerable amount of time studying the ranges,” Montgomery said. “We wanted to avoid some of the pitfalls of the housing crisis, and this is a message that we heard loud and clear. We’ve worked closely with groups out there, and obviously with our own Office of Policy Development and Research.”

Industry response

Industry participants applauded HUD’s expansion of the rules.

“Condos have become an affordable housing option for seniors, especially in high home value areas, so the FHA’s new policy has the potential to help a large group of older Americans age in place,” said Jesse Allen, EVP of alternative distribution at American Advisors Group (AAG) in an email to RMD.

Others acknowledged that this decision on condominiums has been long-requested.

“After years of working with HUD on this issue, it’s great to see them lift their ban on spot approvals,” said Scott Norman, VP field retail and director of government relations at Finance of America Reverse (FAR). “There is a great deal of demand in the condominium market, so this is very welcome news. While we are still going over the details, this announcement could help qualify tens of thousands of homeowners for reverse mortgages over the next few years and may allow more seniors the opportunity to age in place. We applaud HUD and Commissioner Montgomery for their hard work on this document.”

Some lenders also see this new rule as overcoming cumbersome approval rules which govern full condominium complexes, since homeowners associations (HOAs) often never bothered with applying in the first place.

“Most HOA’s that are not currently FHA approved have little interest in applying for approval. It seems most management companies aren’t open to it or they know there are issues they have run into in the past that prohibit FHA approval,” said Michael Mazursky, president of iReverse Home Loans. “This should definitely help many Seniors qualify for a HECM that in the past couldn’t proceed. The proprietary product has been able to fill the void, but this is a new outlet that should be extremely beneficial to Seniors.”

The industry’s trade association also lauded the new rules’ announcement.

“While NRMLA is working through the details of the new condo rules with our Board, outside counsel and HUD Issues Committee Chairperson, we certainly appreciate the Department’s release of these new rules,” said Steve Irwin, SVP of the National Reverse Mortgage Lenders Association (NRMLA) in an email to RMD. “Many senior condo owners have been frustrated by their inability to get a reverse mortgage on their condo, and this new rule should enable eligible senior condo owners to now take advantage of a reverse mortgage so they might continue to age in place.”

FHA estimated this new policy will notably increase the amount of condominium projects that can now gain FHA approval. 84 percent of FHA-insured condominium buyers have never owned a home before, according to agency data. Only 6.5 percent of the more than 150,000 condominium projects in the United States are approved to participate in FHA’s mortgage insurance programs.

“As a result of FHA’s new policy, it is estimated that 20,000 to 60,000 condominium units could become eligible for FHA-insured financing annually,” the press release said.

fair housing logoShawna McDonald, Reverse Mortgages Only Loan Officer has specialized solely in reverse mortgage loans for 11 years and has successfully completed hundreds reverse mortgages. Approved with 10 of the largest reverse mortgage lenders in the nation, she is available by appointment; her local office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main St. Suite N, Grass Valley, (530) 497-3010. The website is NMLS #271335 BRE #00585530 Borba Investments, Auburn, CA Company NMLS #76801 BRE# #01386892


Reverse Mortgage Updates & Tidbits April 2019

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The end of 1st quarter 2019 has arrived; here are some interesting new items that have popped up in reverse mortgage lending:

  • The Housing and Urban Development Agency (HUD) increased the recognized home value for a reverse mortgage loan in California from a maximum of $679,650 to $726,525. For homes valued above $726,525 RM proprietary jumbo loans are available with a home value maximum of 4 million.
  • Purchase RM loans are increasing in popularity; however the need to plan early for a RM purchase loan pre-approval, before putting the current home up for sale, is imperative. As with all loans, there is income documentation, credit scoring, and for RM loans the addition of the HUD mandated reverse mortgage counseling, all documentation should be completed with a reverse mortgage loan officer before being caught in the panic of: “Yikes, our home sold so fast, we need to put an offer in on another home, but have no reverse mortgage loan officer          pre-approval letter to go with a purchase offer”.
  • HUD RM rules do not allow for short term rentals of a “granny” unit, formal name: accessory dwelling unit (ADU) if the home owner has a RM loan. However, traditional longer term rentals of an ADU are allowed, such as a 1 year lease. I’ve met with several clients who rely on ADU income from a short term VRBO or Airbnb rental arrangement, and have declined to move forward with a RM credit line loan to further increase their retirement income because they wanted to keep the short term rental option of their ADU. Other clients concluded their short term rental was a hassle; they had trouble with partiers, and the final straw being the need to stick around and not travel in case the short term tenant couldn’t seem to get the heater working. These clients stopped short term renting and used the RM credit line income to supplant the lost rental income. (On March 26th, 2019 the County of Nevada moved to ban the use of ADU’s for short term rentals in Ordinance SR-19-0157 with a few exceptions).
  • The HECM program (“HECM” Home Equity Conversion Mortgage is the formal name for a reverse mortgage loan) is designed to be budget-neutral, without reliance on Congressional appropriations. Recent conservative changes to the RM program have moved it to be self sustaining and generating a positive cash flow.

Hello, for more in depth reverse mortgage information from Shawna McDonald, Reverse Mortgage Loan officer serving Grass Valley, Nevada City, Penn Valley and Alta Sierra, the author of this newspaper article,  visit my website or better yet call for an appointment, I’m all about anything reverse mortgage !

Shawna McDonald, Reverse Mortgage Loan Officer, for 10 years has specialized exclusively in reverse mortgage loans & successfully completed hundreds of them. She is available by appointment in her downtown Grass Valley office for a no-obligation consultation. If you move forward, TLC guaranteed throughout the loan process. Sierra Foothills Reverse Mortgage (530) 497-3010. NMLS #271335 | CalDRE #00585530 Borba Investments Inc. Company NMLS #76801 |Company CalDRE # 01446165 These materials are not from, and were not approved by HUD or FHA

Experts: Home Equity and the Reverse Mortgage Can be the Key to Solving the Country’s Looming Retirement Crisis

And Yes, It Finally Did Snow in Grass Valley, Nevada City, Alta Sierra, Colfax and maybe a hint in Penn Valley. Now we all can’t wait for spring !


senior shoveling snow larger

As Baby Boomers continue to retire en masse without sufficient savings to support their later years, it’s become glaringly apparent that the country is on the brink of a retirement crisis.

Pensions have dwindled, Social Security is insufficient, health care costs are rising and people are living longer than ever before, carrying little resources with them into retirement. But many older Americans do have one major source of wealth at their disposal: their house. And for some, utilizing their home equity could be the answer to their late-in-life money problems.

That’s why some experts are insisting that reverse mortgages – which allow older homeowners to access their home equity and remain in their homes – are an important public policy that must be preserved for future generations.

Alicia Munnell, director of the Center for Retirement Research at Boston College, said tapping home equity is essential to solving the country’s retirement crisis. “It’s very clear that for most middle-income people, their house is their largest asset. In the past, they really haven’t touched this asset in retirement, but we are in an environment where Social Security is providing lower replacement rates, and 401(k) plans have modest balances, and the time will come when the only way people will be able to maintain their standard of living will be to tap their home equity.”

The Urban Institute’s Laurie Goodman agreed that reverse mortgages could help millions of Americans achieve a more comfortable retirement.

Goodman pointed out that nearly 37% f senior homeowners are worried about their finances retirement, while many of them are sitting on a mountain of housing wealth, more than $3 trillion. “Tapping into home equity is a possible solution to the financial strain facing some elderly homeowners,” Goodman said. “The bottom line is that there is enormous untapped housing wealth for this age group and a significant untapped market for the housing finance industry.”

Goodman pointed to an Urban Institute study that revealed there are 920,580 U.S. households headed by someone over 65 that have an annual income at or below $20,000 and a liquid net worth at or below $50,000, but they also at least $100,000 in home equity. “These folks should be looking at using their home equity to help them manage their finances,” Goodman said. “All together, these less than 1 million household have $208 billion in home equity they could be using.”

But they’re not.

Goodman said reverse mortgages have a number of impediments preventing them from mainstream use, including consumer misconceptions and the loan’s high cost and complexity.

But these issues aren’t the only problems. Goodman said there’s a collective reluctance among older homeowners to utilize home equity. “Even if all the structural impediments were removed, behavioral and attitudinal barriers would keep many senior homeowners from tapping their housing wealth,” she said.

Goodman said that even though reverse mortgages have not gained widespread acceptance, they could help both low- and high-income homeowners achieve a more financially secure retirement.

“For low-income retirees or those who are financially burdened but own substantial housing wealth, tapping home equity could obviate the need to cut spending on essentials, such as food, health and medicine,” she said. “High-income households could leverage equity to modify their homes to improve in-home safety and mobility.”


If you’d like to explore options of using a Reverse Mortgage Loan for tapping into your home’s equity to pay for property taxes, maintenance, increase your retirement income by using a reverse mortgage credit line loan, or paying off an existing loan, whereby you then have no monthly mortgage payment requirement, give me a call to set up a no obligation, no pressure consultation in my conveniently located downtown Grass Valley Office: Shawna McDonald, Loan Officer, 10 Year Experienced Reverse Mortgage Specialist Sierra Foothills Reverse Mortgage Grass Valley l (530) 497-3010. NMLS #271335 | CalDRE #00585530 Borba Investments Inc. CalDRE #01456165 Company NMLS #76801 These materials are not from, and were not approved by HUD or FHA   

Reprint from Jessica Guerin, reduced content for brevity

When it Comes to Reverse Mortgages, Sooner is Better than Later……….. Reprint from The Union Nevada County Newspaper


seniors walking in fall

Happy Fall !   Here is a reprint of an article from the Union Newspaper of Nevada County:

Clients come to me to: establish a reverse mortgage credit line, pay off an existing loan, or purchase a home. I then analyze their qualifications under current RM rules, emphasis on “current”.  Housing and Urban Development, “HUD”, creates RM lending rules. When HUD issues rule changes we receive little or no notice. However, HUD RM program changes do NOT affect a completed loan.

When advising client(s) they qualify for a RM loan, they may chose to “do the loan later”. Upon return my “later” clients are unhappy to learn they no longer qualify, or if they qualify, HUD changes are not advantageous to them, some examples:

  • “Later” clients returned when one of them became dementia incapacitated, in-home care expenses were mounting, but it was difficult to establish a RM credit line loan to pay for expenses because using a power of attorney/conservatorship to initiate a RM loan, once one borrower has become incapacitated, is complicated. It is less complicated to use POA/conservatorship documents to keep credit line funds flowing to pay for expenses when the RM credit line was completed at a point in time when both borrowers had capacity. If one co-borrower remains living in the home with a RM loan, the other co-borrower may reside in assisted living if that need arises; also, the sooner a credit line loan is established, the more advantageous the credit line growth feature becomes.
  • A client wanted to pay off his existing mortgage with an RM loan, eliminating his monthly mortgage payment, thus increasing monthly liquidity. He was initially qualified but decided to wait. In the interim, HUD lowered the lending formula, creating a shortfall of lendable funds to pay off the existing mortgage. Having funds in a retirement account he is able to complete the shortfall to pay off the existing mortgage by bringing funds into escrow, but wishes he had completed the loan earlier.
  • New clients selling their home and wanting to purchase a replacement home with a reverse mortgage waited for a loan consultation until after their existing house was in escrow and a replacement home found, the wait caused a loss of the replacement home to a competing buyer; per newer HUD rules on RM purchase loans, 2-3 weeks advance planning with a loan officer prior to submitting a purchase contract on a replacement home is advisable.

 Shawna McDonald, Loan Officer has specialized in reverse mortgages loans for 10 years and is available by confirmed appointment; her local office, Sierra Foothills Reverse Mortgage, is located at 412 E. Main St. Suite N, Grass Valley, (530) 497-3010. NMLS#271335 BRE #00585530 Borba Investments, Auburn, CA Company NMLS #76801 BRE# #01386892 As with all loans, it is required that property taxes and fire/casualty insurance be kept current.