industry has been that, in the past at least, consumers saw reverse mortgages
as a last-ditch effort to meet living expenses. But that’s changing as the more financially savvy Baby Boomers become eligible for reverse loans.
In the 1990s and early 2000s, reverse mortgages were advertised a way for consumers to get cash simply to pay living expenses. And that marketing strategy may have hurt more than it helped, according to Steve Resch, vice president of wholesale for Generation Mortgage.
“It was a really frustrating period, and I think the reason is that it was a loan of last resort,” Resch said recently at the NAMB National conference in Las Vegas. “It was marketed as a last-resort loan. I think we're starting to turn the corner now, and it's starting to be seen as a loan of choice. With the Baby Boomers coming on board, it's creating a real opportunity for this program to take off.”
The Boomers, by and large used to investing and financial planning, see the reverse mortgage as an opportunity to build wealth rather than a last-ditch lifeline.
“In the past, borrowers) were taking all the money out upfront,” Resch said. “Now we're seeing a huge growth in the planning side of this program. We're seeing younger baby boomers coming into the marketplace saying, 'I'm going to work until I'm 70.' A lot of them still have a mortgage. So we're saying, go and take your current mortgage balance and convert it into a reverse mortgage and continue making payments on it. Then you've started a line of credit at age 62 that at age 75 is probably going to be double what it would have been.”
And that kind of far-thinking strategy appeals to Boomers – opening up a new client base to reverse mortgage specialists, Resch said.
“We're looking at a whole new business opportunity. You've got 10,000 boomers a day turning 62. These are people that are used to leverage. They’re used to working with financial advisors,” he said. “I look at this as an opportunity to enhance your lifestyle. You can use it to enhance your wealth or fund life insurance trusts or things like that.”
One of the stumbling blocks faced by the