Reverse Your Mortgage

ATTORNEY TESTIMONIAL "Taking Care of Mom & Dad"

"My name is SR, attorney at law and I recently interfaced with Angella in regard to a reverse mortgage product for my parents. She was very thorough and responsive to all inquiries. She took the time to personally drive to my parents' home to meet with them and explain the process. I was particularly impressed with her presentation of numerous products in an "apples to apples" format so we could evaluate which product was best for my parents' particular needs, goals and value judgments. Angella was extremely professional and helpful. I strongly recommend her to anyone interested in reverse mortgage products." Thanks for all your help--you really did a great job! Best, SR

Case Study: John is 80 years old, Ann is age 60, should Ann come off title to do a Reverse Mortgage? How much time will she have to sell her home if it becomes due?

Ann contacted me to look into a reverse mortgage. Ann is 60 years old, her husband John is 80 years old. Ann and Howard have been current on their mortgage but she can see the writing on the wall. Before the end of the year they will no longer be able to afford their home. Their retirement income no longer supports them. Their home like most of us has lost significant value. They could put their home on the market for sale but comparable homes are taking a year or more to sell. They are contemplating attaining a reverse mortgage. In order to do so Ann will have to come off title to qualify. If her husband passes before she does the loan will become due. Ann's question for me was if something happened to her husband, would she be able to live in her home while she marketed it. She also wanted to know how much time she had to do so.

The answer to her question is yes - she would be able to remain in the home if her husband passes away.  However, she would either have to pay off the reverse mortgage loan balance in full (if she wanted to remain in the home) by refinancing, or sell her home.  As long as she is in regular communication with the servicer after her husband passes, HUD allows up to one year from the date of death for the loan to be paid in full, before a foreclosure action would need to be initiated. The key is acting in good faith, communicating with the servicer and marketing the home at comparable market value. If the estate is going through probate, she would also be able to remain in the home until the probate is finished and the sale is complete. Again, the key is acting in good faith and communicating with the loan servicer. These rules apply to homes that pass to heirs also.

 

Long Distance Care Givers Receive Help

 

Living in a different city or state -- miles from aging parents -- can be very difficult. Keeping in touch by telephone and making long trips to help parents or aging relatives with their needs can be time consuming and not nearly as effective as being available full time in person.

Mark Sessions spent two years juggling his restaurant business with multiple daily phone calls to his elderly parents, checking on their needs and answering their questions. Family vacations were spent traveling the 500 miles to his parent's home to personally take care of home maintenance and provide health care visits to their doctor. During his last visit, Mark noticed his father had difficulty walking and his mother was confused as to which medications she was to take and at what time. This alarming change in his parent's condition concerned Mark that his parents' care needs required more than frequent phone calls and vacation visits. Running his business and handling his parent's long distance care was now becoming very challenging.

According to a report by the Alzheimer's Association of Los Angeles & Riverside, California, there are approximately 3.3 million long distance caregivers in this country with an average distance of 480 miles from the people they care for. The report also states that 15 million days are missed from work each year because of long distance care giving. Seven million Americans provide 80% of the care to ailing family members and the number of long distance caregivers will DOUBLE over the next 15 years.
Long Distance Caregiver Project – Alzheimer's Association LA & Riverside, Los Angeles, CA (May 15, 2002, National Web Seminar by Judith Delaney, MFT, Clinical Coordinator)

The long distance caregiver is a new role that is thrust upon children and younger family members. Families used to live closer together, with children residing and working near their parents. But nowadays family members are more distant from each other. Society, today, is recognizing this. Some caregiver services have tweaked their programs to work as liaisons between long distance caregivers, senior loved ones and local medical professionals.

Professional care managers -- a lso known as Geriatric Care Managers, Elder Care Managers or Aging Care Managers -- represent a growing trend to help full time, employed family caregivers provide care for loved ones. Care managers are expert in assisting caregivers, friends or family members find government-paid and private resources to help with long term care decisions.

They are professionals -- trained to evaluate and recommend care for the aged. A care manager might be a nurse, social worker, psychologist, or gerontologist who specializes in assessing the abilities and needs of the elderly. Care manger professionals are also becoming extremely popular as the caretaker liaison between long distant family members and their aging elder loved ones.

Jacqueline Marcell -- author of "Elder Rage, or Take My Father...Please! How to Survive Caring for Aging Parents" (Impressive, 2000) -- says,

"The most important thing to do is to find a geriatric care manager in the area where your loved one lives. She will have knowledge of all the services in the area and can be your eyes."

Below is a partial list of what a care manager or Professional Geriatric Care Manager might do:

• Assess the level and type of care needed and develop a care plan.
• Take steps to start the care plan and keep it functioning.
• Make sure care is in a safe and disability friendly environment.
• Resolve family conflicts and other issues with long term care.
• Become an advocate for the care recipient and the caregiver.
• Manage care for a loved one for out-of-town families .
• Conduct ongoing assessments to implement changes in care.
• Oversee and direct care provided at home.
• Coordinate the efforts of key support systems.
• Provide personal counseling.
• Help with Medicaid qualification and application.
• Arrange for services of legal and financial advisors.
• Provide placement in assisted living facilities or nursing homes.
• Monitor the care received in a nursing home or in assisted living.
• Assist with the monitoring of medications.
• Find appropriate solutions to avoid a crisis.
• Coordinate medical appointments and medical information.
• Provide transportation to medical appointments
• Assist families in positive decision making
• Develop care plans for older loved ones not now needing care
  “The 4 Steps of Long Term Care Planning,” National Care Planning Council

Services offered will depend on the educational and professional background of the care manager, but most are qualified to cover items in the list above or can recommend a professional who can. Fees may vary. There is often an initial consultation fee that is followed by hourly fees for services. Health insurance does not generally cover these fees but long-term care insurance might.

In 2002, the AARP published a survey from geriatric care mangers about their fees:

“Respondents were asked how much they charged for their services, which might include: an initial consultation; fees on an hourly or per visit basis; fees for development of a care plan; and fees on a fixed-price contract basis. Hourly fees averaged $74 an hour. GCMs charged an average $168 to develop a care plan. Initial consultations averaged $175. Seven of ten current GCMs responded in the affirmative when asked if they had a statement that listed their fees. ” Written by Robyn Stone, DrPH, Principal Investigator; Susan Reinhard, RN, PhD, Co-Principal Investigator; Jean Machemer, MSG, Research Associate; and Danylle Rudin, MSW, Research Associate of The Institute for the Future of Aging Services, Washington, D.C.Barbara Coleman, Project Manager, AARP Public Policy Institute November 2002

When you take into account the time absent from work and time to find the right care resources for your loved ones, along with the cost of travel expenses to monitor their care, you will probably concur that using a caregiver is money well spent. Add on to this the stress of handling your own life circumstances combined with being a caregiver and you will probably wonder how you could have ever done without the care manager.

A professional or geriatric care manager can be an important asset to all families in elder care situations. Here is an example of how a care manager can help.

Mary is taking care of her aging husband at home. He has diabetes and is overweight. Because of the diabetes, her husband has severe neuropathy in his legs and feet and it is difficult for him to walk. He also has diabetic retinopathy and, therefore, cannot see very well. She has to be careful that he does not injure his feet, since the last time that happened he was in the hospital for four weeks with a severe infection. She is having difficulty helping him out of bed and with dressing and using the bathroom. She relies heavily on her son, who lives nearby, to help her manage her husband's care.

On the advice of a friend, Mary is told about a professional care manager, Sharon Brown. The cost of an initial assessment and care plan from the care manager is $175.00. Mary thinks she has the situation under control and $175.00 for someone from the outside to come in and tell her how to deal with her situation seems ridiculous.

One day Mary is trying to lift her husband and injures her back severely. She is bedridden and cannot care for her husband. Her son, who works fulltime, now has two parents to care for. On the advice of the same friend, he decides to bring in Sharon Brown and pay her fee himself.

Sharon does a thorough assessment of the family's needs. She arranges for Mary's doctor to order Medicare home care during Mary's recovery. Therapists come in and help Mary with exercises and advice on lifting. Sharon advertises for and finds a private individual who is willing to live in the home for a period of time to help Mary with her recovery and watch over her husband. Sharon makes sure the new caregiver is reliable and honest and that taxes are paid for the employment. Sharon enlists the support of the local area agency on aging and makes sure all services available are provided for the family.

Sharon also calls a meeting with Mary's family and explains to them the care needs and how they need to commit to help with those needs. Sharon makes arrangements to rent or purchase medical equipment for lifting, moving and easier use of the bathroom facilities. Medicare will pay much of this cost. Sharon also works closely with an elder law attorney and a financial planner who specializes in the elderly. The attorney prepares documents for the family including powers of attorney, a living will and advice on preserving Mary's remaining assets. The financial planner recommends a reverse mortgage specialist to help Mary and her husband tap unused assets in their home's equity. Some reverse mortgage proceeds are used to pay off debt. The remaining proceeds are converted into income with a single premium immediate income annuity in order to provide Mary adequate income when her husband is gone and she looses one of the Social Security payments.

With the help of the care manager, Mary's life and future have been significantly improved. Her husband as well, if he adheres to the care plan, may end up having a better quality of life for his remaining years.
“The 4 Steps of Long Term Care Planning,” National Care Planning Council

The National Care Planning Council promotes and supports professional and geriatric care managers on its website www.longtermcarelink.net .

HUD’s New Reverse Mortgage Counseling Set of Rules Includes Test for HECM Borrowers

 

The Department of Housing and Urban Development (HUD) is introducing a new counseling protocol to help borrowers consider whether a reverse mortgage is the right choice for them.

·       The new guidelines make sure that the clients initiate contact with counseling agencies.

o   There have been some instances where lenders have made the calls on behalf of their clients and then handed them the phone. This will no longer be allowed.

·       It also requires that lenders provide every client with a list of no fewer that ten HUD approved counseling agencies, five must be with in the state where the borrower resides and one must be within a reasonable driving distance.

o   HUD used to require counseling be performed face to face unless the client requested to receive telephone counseling. This proved to be difficult for some elderly borrowers and a majority of borrowers preferred the telephone counseling.

·       HECM counselors are required to review a client’s unique financial situation during a HECM counseling session. In order to conduct this review, a counselor must document a client’s budget based on financial information (e.g. income, assets, debts, monthly expenses) provided by the client.

o   It’s true that a majority of reverse mortgage recipients need a reverse mortgage. It is also true than less than 30% of counseling recipients have had any kind of financial or budget training. However, a reverse mortgage is a personal choice. The purpose of counseling is to make sure that the borrowers understand the loan, how it works, the costs and what the loan might look like in the future. I can understand this kind of review in the case of bankruptcy counseling where a client is attaining help for relief of debt. Will borrowers really want to share personal financial information with a counselor? What of the borrowers that attain reverse mortgages to help a child or enhance their lifestyle? Is income and budget information required to justify a personal decision? Reverse mortgage counseling is absolutely an excellent HUD and industry standard. It is imperative that a borrower fully understands any loan or financial product before attaining it. I believe that setting policies to help people make decisions that set them up for success is good, but I question requiring borrowers to provide personal information and personal reasons to a counselor before they can attain a loan. I think it would be a better policy to offer the option to the borrower to review their budget.

·       Counselors will have the authority to hold back counseling certificates if they feel the borrower fails to comprehend basic reverse mortgage concepts. Counselors will ask 10 questions from a list of 20 items published in the protocol and borrowers are required to answer at least 5 questions correctly to be eligible to receive a counseling certificate. If the borrowers fail the test, they are required to wait 7 days and then go through another counseling session.

o   I think this will be a good practice to incorporate into the counseling session. It is vital that borrowers understand their loan. If a lender has done their job properly a counseling session should simply be a quick review for the client. Reverse mortgages are not easy for everyone to understand. Even educated professionals are often challenged to understand the concept much less the intricacies of a reverse mortgage.

·       All counselors who wish to continue counseling borrowers will have to pass an exam demonstrating their knowledge of reverse mortgages.

o   This is an excellent requirement. The quality of counseling has increased dramatically over recent years. In the past borrowers have had to endure some counselors reading from a script. I personally have corrected counselors in some of the information that they have provided to borrowers. I would further have counselors trained in techniques in counseling. There have been instances in that a counselor’s accent or cadence of speech has inhibited a borrower’s ability to understand them.

I think certain portions of the new protocol are excellent. Testing of the counselors absolutely needs to be required. Counselors quizzing borrowers isn’t necessarily a bad thing. It can be done in such a way so as to document that borrowers understand reverse mortgages. I am however opposed to counselors asking for personal financial information which feels more like a violation of privacy. A borrower shouldn’t have to justify if and why they want a reverse mortgage. Reverse mortgages are a personal decision. Yes, it should be an informed one; however financial information is as personal as medical information. We have HIPAA laws protecting medical information, financial information should be the same.