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Medical Forum / Diseases and Disorders / Alzheimer's / January 2005Reverse Mortgages?
Has anyone out there had the experience of using a reverse mortgage to pay for care? Wondering what anyone may have experienced. Thanks! Valerie VanBooven RN, BSN, PGCM www.aginganswer.com > Has anyone out there had the experience of using a reverse mortgage to > pay for care? Wondering what anyone may have experienced. IMHO this is a way for banks to take advantage of seniors who are in a financial bind. you might check out if it would work out better financially to sell the house and invest the proceeds in an annuity. if there are children that want to purchase the house, you could carry the mortgage and have a bank act as the escrow agent. that way, the mortgage becomes an income stream instead of the house being an asset. personally, i wouldn't do any of these things without discussing them with an attorney experienced in elder law, including medicaid lookback provisions and estate planning. Actually banks don't make reverse mortgages, the Federal government does. A bank may act as the sales agent, but its strictly a government program as they lose money on most of them. You get to live in your house as long as you keep it up and pay the taxes, regardless of how much you may end up owing against the house. At the end (death or leaving the house)the house is the only collateral for the loan and no other assets or money are paid back if you owe more than the house is worth. It can let you use the equity to pay for care at home, versus selling the house to move into a facility. Since you can't take the house with you when you go, its not that bad an idea for some situations. Counselling is mandatory for your protection. You can preview how much you can get from a reverse mortgage at www. reverse.org and follow the links to the reverse mortgage calculator. > Has anyone out there had the experience of using a reverse mortgage to > pay for care? Wondering what anyone may have experienced. > Thanks! > Valerie VanBooven RN, BSN, PGCM > www.aginganswer.com Not completely true - there are several types of reverse mortgages offered by various government agencies AND commercial ventures : * the US federally insured Home Equity Conversion Mortgage (HECM), administered by the Department of Housing and Urban Development (HUD) * single-purpose reverse mortgages, usually offered by state or local government agencies for a specific reason * proprietary reverse mortgages, offered by banks, mortgage companies, and other private lenders and backed by the companies that develop them. Mary G. Mary_Gordon@tvo.org is alleged to have said: > Not completely true - there are several types of reverse mortgages > offered by various government agencies AND commercial ventures : [quoted text clipped - 6 lines] > companies, and other private lenders and backed by the companies that > develop them. There are also what I think are called viatical settlements. They became popular when AIDS was a quickly fatal disease. The way it works is, A is sick and can't work and needs income, but has a life insurance policy and no heirs that need to collect on it (like minor children). B has money. So B becomes A's beneficiary and pays A a steady income while A is alive. When A dies, B receives the insurance money. It pretty much depends on A having taken out the life insurance policy before becoming ill. The reverse mortgage reminds me of a similar French practice -- you buy an elderly person's house, they continue to live in the house until they die, then you get possession of the house. Usually, the old person does not live terribly long, but in one case, a woman lived to be well over 100 and outlived the man who had bought her house decades earlier...  SignatureJo Ann Malina, make spamthis best to find my address Our charity begins at home, and mostly begins where it ends. --Horace Smith Thanks all, this tells me something about the topic- most of us don't understand it- or have received misleading information one way or another. Im going to Baltimore for training on the matter next week, and hope to get the right information from the right people. I'll let you know what happens! Valerie VanBooven RN, BSN, PGCM www.aginganswer.com www.theltcexpert.com : There are also what I think are called viatical settlements. They : became popular when AIDS was a quickly fatal disease. : : The way it works is, A is sick and can't work and needs income, but has : a life insurance policy and no heirs that need to collect on it (like : minor children). B has money. So B becomes A's beneficiary and pays A : a steady income while A is alive. When A dies, B receives the insurance : money. It pretty much depends on A having taken out the life insurance : policy before becoming ill. Unfortunately the viatical settlement community seems to be lousy with scam artists. I'm certain there are good ones out there somewhere, but caution is advised. : The reverse mortgage reminds me of a similar French practice -- you buy : an elderly person's house, they continue to live in the house until : they die, then you get possession of the house. Usually, the old : person does not live terribly long, but in one case, a woman lived to : be well over 100 and outlived the man who had bought her house decades : earlier... I think we can do this here with the sale of a remainder interest while keeping a life estate. There may be benefits to this, but its essential to pay heed to Dennis' suggestion elsewhere in the thread to consult with someone competent in elder la to minimize the chances of the good idea turning into a nightmare. (Eg., seller goes into a nursing home, now what happens to the house? Does anyone want to rent a place where they'll have to phone someone every morning to see if they have to move out because the life tenant died? Did medicaid get all mussed up? Did the elder have creditors at the time of sale? etc etc etc) Some good information here http://www.reverse.org/ Mary G. : Some good information here : : http://www.reverse.org/ Do you (or does anyone) have anything positive to say about reverse mortgages in in general, or the NCHEC in particular? I can't find anything objective about this NCHEC organization other than references to it on AARP and the FHA webshites which, IMO, lack objectivity, the former because of commercial ties and the latter due to our administration. Googling NCHEC brings up a bunch of creditors (spit) who have no reason to 'dis' someone in favor of the latest scheme to extract dollars from people. Perhaps I'm just too cynical. Post-dot.com-blowout these days I'm just a simple bankruptcy attorney (along with, as Macrae put it in too many words, an "AC"), who has taken too many good elderly folks into bankruptcy due to med bills, and I get asked about this a lot and have no useful advice to render other than to describe the legal risks and take the numbers to an accountant. I recently watched an aging family member go through bankruptcy proceedings - and I think we could have avoided that if we had known about reverse mortgage. Here's what really interests me though- let's say a 78 year old unhealthy person cannot qualify for or afford long-term care insurance, but wants to stay in their home for as long as possible- private pay home care---seems to me that a reverse mortgage could help that person stay at home longer.....so the bank takes the house when the person dies.....well, if that person went into a nursing home on medicaid instead of the reverse mortgage-- the govt would do a mandatory estate recovery anyway- which essentially means selling the house upon that person's death. It seems like a viable alternative in some cases...not for everyone- but in some cases. Thoughts? Valerie VanBooven RN, BSN, PGCM www.theltcexpert.com www.aginganwer.com www.firstcallprogram.com : I recently watched an aging family member go through bankruptcy : proceedings - and I think we could have avoided that if we had known : about reverse mortgage. May I ask what kind of debt was involved? A typical elderly br client I see needs to get out from under medical expenses in the five figure range, then come credit cards used used to live on, and so often it doesn't break my heart anymore, debts for obligations cosigned for a child who defaulted and doesn't contribute a penny back to the parent. : Here's what really interests me though- let's : say a 78 year old unhealthy person cannot qualify for or afford : long-term care insurance, but wants to stay in their home for as long : as possible- private pay home care---seems to me that a reverse : mortgage could help that person stay at home longer.....so the bank : takes the house when the person dies.....well, if that person went into : a nursing home on medicaid instead of the reverse mortgage-- the govt : would do a mandatory estate recovery anyway- which essentially means : selling the house upon that person's death. Folks reading this shouldn't assume it applies to them not knowing which state the 78 yo lives in, what kind of lead time there is for planning, assets, debts, in other words far too many things to get into in a netnews article. She incurred her own debt- partially due to not making ends meet, and in part because of dementia...no children took any money from her. In fact, it was her grandchildren who went down to her small vacation cabin and realized that the electricity had been shut off- due to non-payment. She didn't even realize that she hadn't paid the bill. If they hadn't made the trip, I don't think anyone would have dug deeper- and found out how much debt she really had. She is not a frivilous person, very frugal. Medical expenses and medications were part of the problem along with dementia. Valerie VanBooven |
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