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Just Whose Home Is it Anyway?


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Adult Children and Inheritance Entitlement

reverse mortgage newsHave you ever had a loan shot down by the borrower’s children? It’s not uncommon and such a scenario prompted a recent article in the New York Times entitled “Reverse Mortgage Realities”. The article opens with the statement that children have reason to be skeptical of their parents taking out a reverse mortgage unless they plan to stay in their home indefinitely and can meet ongoing property obligations. However…” elder law and reverse mortgage experts say they frequently encounter resistance from children less concerned about the terms of the loan than about losing their presumed inheritance.” The operative words are ‘presumed inheritance’, in other words, whose home is it anyways? The children’s or the current homeowner? Most of you watching would say the later.

Yet this is a common issue encountered by most reverse mortgage professionals: senior homeowner’s needing relief from mortgage payments or increased cash flow and children who block the loan to protect their own self interests. To navigate such an emotionally charged situation is much like walking through a minefield. One misstep can be costly.

Download the video transcript here.

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  1. My favorite story on this subject comes from my mentor, Mr. Jason Sobh. A couple called him a few years ago to meet with them and explain what a reverse mortgage was and show them how it worked. After he discussed the mortgage to them, they described their cash flow needs. It was evident that some months required more help than others but they had a very nice home with no debt.

    A few days later the couple called and said that their sons would like to meet with him as well. It turned out that the meeting place was to be the conference room of the law firm the two sons owned and operated.

    At the meeting Mr. Sobh began explaining how a HECM worked with the two sons asking many questions. When Mr. Sobh was done, the two sons dismissed the idea about getting a HECM. Mr. Sobh immediately summarized the cash flow needs of the parents and told them with the great law firm they had, they should have no problem taking care of those needs.

    The sons asked if they could leave the room for a small conference. As they left the parents explained that their sons had older teenagers who the sons complained were eating up their cash reserves.

    A few minutes later the sons reappeared asking how soon their parents could get a HECM and what was the next step.

  2. Not my first response…but I have been driven at times to ask the adult child: “How long have you been paying your parents monthly mortgage/monthly bills…”

  3. In most cases the family is unaware of the financial stress their parents are undergoing and are equally unaware of how beneficial a Reverse Mortgage can be for the parents enabling them to remain in their home.

    Occasionally, the children are just plain greedy and are afraid they will be loosing their inheritance if their parents do a Reverse Mortgage. Often, education can help but in many cases, the kids simply are too selfish.

    Once the “kids” are aware of their parents plight, if they can help, they do and sometimes they will assist their parents by help them with a Reverse Mortgage.

  4. I’ve found there are only two types of children, whether in their 40’s or their 60’s. Loving nurturing children who want their parents to be comfortable, recognize their parents, not them, paid for that house, and have a desire to see their parents enjoy a rich and rewarding retirement. Then there are the other type, which I affectionately call “Greedy little bas%*#ds”.

    • You hit that one right on the head, and this is why its been so difficult at times to get past the parents and help them out, when the 2nd kind of kids are involved..

  5. I had recently had two meetings were children were involved resulted in the children recommending a Heloc instead of a HECM.
    It was mostly because of lack of education- this in spite of the numerous information I sent both parents & children. Both of these couples had done a lot of research online prior to meeting with me — but it was the children’s advice that they ultimately took. It was a bit sad because I could tell that the children didn’t even bother to read the information I provided.
    One couple could not qualify for a traditional Heloc so they
    are stuck with mortgage payments & have little for anything else.

  6. I have also lost HECM opportunities because the kids recommended “no change” or a regular HELOC. It’s disappointing to see the parents live their golden years with no extra funds. In some cases, the children don’t want to learn about the products, and frankly are much more worried about themselves, than their parent’s financial retirement .

  7. All of the above, and….

    In my earlier years I danced the dance with children while collecting the delinquent loan accounts of their parents. It was emotional then, as it is now, dealing with the finances of their “senior aged” parents.

    We will almost always lose the battle when dealing with selfish children that hold sway over their parents. In those cases about the only thing we can do is expose the kids for what they are and hope that exposure will create an “ah ha” moment, a change in one or more of the parties behavior, for the positive.

    I have no problem with providing errant misguided children with an alternate means of curing their parents financial challenges. I call it the “math solution”. It’s pretty simple. If mom and dad are coming up short $1000 every month and there are four adult children they can solve the problem by chipping in $250 each every month.

    Mom and dad are taken care of and I have accomplished what I set out to do, which was to find a way to assist my senior clients with their financial problem.

    The “math solution” is one of the last quivers I pull from the bag and sometimes just the mention of it foregoes its use.

    The thing that sets me off the most is all of the advice that our clients get from folks that have no idea of our clients reality. I do not think any one should be giving advice to our clients that have not walked in their shoes or who otherwise don’t attempt to understand what it really means to be a senior, and retired.. Like one of the radio ads on our local radio show suggests, retirement is like being unemployed for 20, 30 or more years.

    For many semi-retired seniors, attempting to supplement their fixed incomes, knowing the day will come when they can’t continue to do so is a frightening reality too.

    I tell my customers that there are two sides to your decision that have to be considered. It is not all about the math. What about the heart?

    What does living comfortably really mean? Is it just about money, a good cash flow? Having a reserve to fall back on for emergencies, untimely large expenses? What difference would having a nest egg do for your spirit?

    What about self respect, self worth, independence, etc. Aren’t these considerations as important as the numbers? Do the kids really understand this, or are the just oblivious to “heart” issues, while so focused on the numbers?

    When you focus on the heart and the numbers, it may help the kids to truly understand their parent’s issues with a net positive result for everyone concerned.

    Helping or clients is what it is all about. Sometimes you have to break some eggs to get results.

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