Record Home Equity For Senior Homeowners And Reverse Mortgages

By | October 5, 2016

Two articles caught my eye this week concerning reverse mortgages and the reasons why they may be an excellent tool for seniors looking to build a cash cushion for their golden years!

Unfortunately and editorially while the product is excellent for the right borrowers, reverse mortgage advertising often leaves much to be desired.

This fact doesn’t really help to create a warm and fuzzy feeling for those who may have questions.

This recent commercial starring Tom Selleck is a perfect case in point.

That being said,  the fact is that seniors have an unprecedented amount of equity in their homes totaling in the neighborhood of $6 trillion!

And, despite the fact that misconceptions continue to swirl around reverse mortgages often preventing senior homeowners (and their heirs) from even considering them, research from as lofty an institution as MIT and its Nobel Prize winner in economics Robert Merton may help to sort things out.

US senior home equity now totals $5.9 trillion

Good news for senior homeowners: the amount of housing wealth held by this demographic continues to grow at a billion-dollar clip, increasing the potential opportunity for reverse mortgages to nearly $6 trillion nationwide.

According to the latest Reverse Mortgage Market Index (RMMI), published by the National Reverse Mortgage Lenders Association (NRMLA), senior home equity experienced a $135.2 billion gain during the second quarter of 2016. The aggregate value of senior home equity now totals $5.9 trillion. Moreover, the RMMI reached a new peak reading of 212.45, up from 207.60 during the first quarter of 2016—an 8.7% YoY increase…‘ Read more here

How to fix the bad rap reverse mortgages have

A leading economics professor from MIT has come out in favor of the reverse mortgage. It makes perfect sense to many in the industry but the backing of a Nobel Laureate is always welcome. Robert Merton was his Nobel Prize in 1997 – and speaking to Prime Time News website he explained why he believes that this type of mortgage is such a great way to provide financial security for so many Americans.

“One must pay for their consumption both during their working years and in retirement,” He said. “Longevity today means one may go from working 40 years with a 10-year retirement, to working 40 years with a 20-year retirement. If we can find ways to get more out of the assets we accumulate, then we can enjoy greater longevity without sacrificing standard of living.”

Given that for most of our clients their largest (and often only) asset is their home – then it follows that their best source of funds for a retirement that maintains their standard of living is that home. Merton also contends that as longevity increases so traditional financial planning methods will become less and less effective – unless the retiree takes more and more risk…‘ Read more here (including some very interesting comments that confirm strong opinions on both sides of the reverse mortgage argument)

Michael Haltman is President of Hallmark Abstract Service in New York and a Director of Heroes To Heroes Foundation.

He can be reached at or at 516.741.4723.

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