BRISTOL, Tenn. - Marketed through television advertisements featuring senior celebrities like Pat Boone, Robert Wagner and James Garner, reverse mortgages are becoming more and more popular across the nation.
But it is difficult to find local people who have chosen a reverse mortgage as an answer to their financial needs because their sense of pride keeps them from speaking publicly about it.
“They’re still very private,” said Joan Dawson, a reverse mortgage specialist with Wells Fargo’s Johnson City, Tenn., branch. “They feel they weren’t able to make ends meet with the funds they had.”
Such mortgages are looked down upon by people like retired Bristol Tennessee resident Robert Latham, who doesn’t think the financial arrangement is all it claims to be.
“Pat Boone makes it sound real simple,” Latham said sarcastically as he had lunch at the Slater Senior Center on Wednesday. “I wouldn’t recommend it to anyone unless they really, really needed it.”
Also known as a home equity-conversion mortgage, a reverse mortgage lets people who are at least 62 borrow money against their homes, as long as they own the property or owe only a small balance on an existing mortgage.
The money is given to the homeowner in a lump-sum payment, through a special line of credit or in equal monthly installments.
Repayment is not due until the last person occupying the home at the time of the loan either dies or moves out. The debts and any interest they incur are then settled when the property is sold.
Participants are barred from borrowing more than a fraction of their property’s total value, and any money left after the loan payoff goes back to their estate.
U.S. Department of Housing and Urban Development spokesman Lemar Wooley said the number of reverse mortgages his agency endorses each year has skyrocketed as more people learn about them.
He said the agency endorsed 157 reverse mortgages when the program first started in 1990. It endorsed 45,537 such arrangements between Oct. 1, 2007, and Feb. 29.
“It’s not [as easy as] it seems it is,” said Michelle Stevens, who also had lunch at the Slater Center on Wednesday. “If [the borrower] plans to give the house to their heirs then it could mess their heirs up.”
Dawson said she has heard similar concerns before, agreeing people retiring now have devoted themselves to paying for their home as something to leave to their children.
However, some retirees are finding themselves in a tough financial situation.
Some of her clients have used credit cards to pay their heating bills, she said, and others have had problems paying down their current mortgages.
“Most of my referrals come from [a borrower’s] children,” she said, adding her clients are happy to have the extra income a reverse mortgage provides them. “The kids don’t want the house. They’d rather have mom and dad living a quality of life that is due to them.”
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