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Professor Sees Reverse Mortgages as a Cornerstone for Retirement Planning

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It’s no small endorsement. Well known Columbia Business school professor Christopher Mayer not only sees a bright future for reverse mortgages but he’s going into business himself. Mayer is tapering his teaching responsibilities at Columbia to serve as CEO of the startup reverse mortgage lender Longbirdge Financial….

 

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2 Comments

  1. I’m not sure that I agree that the HECM will become the “cornerstone” for retirement planning, but I do realistically see it as a viable retirement tool for seniors going forward. It is up to us as originators to learn more about the needs of this segment of our client base and effectively taylor the program to fit them.

  2. What an ultra optimistic outlook to be called bullish. If anything the view of Dr. Mayer is primarily the bullish view of a senior consumer advocate. Capping disbursements in the first year does not provide more revenues to the industry nor will financial assessment. However, he is right when he discusses the momentary concept of senior home equity. No one prognosticator expected the Baby Boomers to turn 62 with less debt than their predecessors but the Great Recession has resulted in more debt than previously predicted.

    Why are IRA and 401(k) distributions impacted by market fluctuations? Beneficiaries are permitted to continue taking the same distributions despite market ups or downs. The only reason why distributions might be impacted by market changes is if beneficiaries are taking RMDs (required minimum distributions) or the beneficiaries have selected to take a specific percentage of the market value in the account (of course, until the distribution is greater than the account balance). Either way the concept of lower distributions is misleading without presenting the assumption upon which the statement is based.

    Perhaps others are impressed by the BCCRR documents of Dr. Munnell, but they seem more marketing biased than research based conclusions. When it comes to reverse mortgage related BCCRR documents, too many look more like marketing propaganda than research driven documents.


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