Seek unbiased help if considering reverse mortgage option

In the article written by Rosemary Heins, I find many statements to be inaccurate or half true. I am a nationally recognized reverse mortgage specialist and have many published articles in nationally circulated mortgage industry publications, including a lead story on reverse mortgages in the August, 2007 edition of the "Niche Report," an East Coast mortgage publication.

First, Rosemary states, "... that a reverse mortgage is a loan where the lender pays you...." The lender always pays the borrower in any mortgage; reverse, conventional, home equity line of credit or otherwise. This is not a unique aspect of the reverse mortgage. Rosemary later goes on to say that, "Reverse mortgage loans typically require no repayment for as long as you live in your home...." NO! not typically, but DEFINITELY the borrower WILL NOT make another mortgage payment for as long as that house is their primary residence. Primary residence is defined as living in the house six months out of the year. This IS the unique and beneficial aspect of a reverse mortgage; a home owner 62 years old or older may access equity from their home and NEVER make another mortgage payment.

Rosemary then goes on to state, "Reverse mortgages may have tax consequences, affect eligibility for assistance under federal and state programs and have an impact on the estate and heirs of the homeowner...." There are no tax consequences. The income from a reverse mortgage is not income to be declared on a tax return. The reason is simple; the home owner is converting what he or she already owns into another form. That is, equity is converted into money. There is no income realized. therefore, no tax issues. For eligibility of federal or state program assistance, there is no affect either. The government created a reverse mortgage for financial assistance to seniors. Why would the government create a program that will negate eligibility for another program of assistance? If the home owner takes out all the available equity in the form of cash and has it in a savings account, this may be considered a liquid asset when medicare assistance is considered. However, if the equity is maintained as equity, there is no issue. Finally, the only effect on estate or heirs that a reverse mortgage has is that the mortgage, like any other mortgage on a house, needs to be paid-off when the home is no longer a primary residence. If the home owners pass on, then the estate, heirs, or proceeds from the sale of the home will pay off the reverse mortgage.

Tobinsmith, the author of the other comment about this article is absolutely correct in stating that MANDITORY counselling is performed prior to a reverse mortgage origination. As a reverse mortgage originator, by law, I am not allowed to incure ANY cost to the potential client until counselling is performed and I receive a certificate showing completion. By incurring cost, I mean ordering an appraisal, credit report, title work, etc.

I believe Rosemary Heins' intentions were good to inform the public about this wonderful reverse mortgage product. However, I am upset that she did not research or clearly state the absolute facts about reverse mortgages. I have originated dozens of them, and NEVER had a customer recinded, regretted, nor complained about any tax, estate, or heir issues. It is unresearched, misinformed, or poorly stated fact journalism like this that can create unnecessary bad press for a good product.

I will gladly respond to any comments regarding my statements. Send email to smednick1@netzero.net