Use Caution Before Applying for a Reverse Equity Mortgage.

If you have considerable equity in your home, you could consider a Reverse Equity Mortgage, to help you meet the expenses of long term health care, including architectural changes to your home to make it more accessible and safe, or simply to meet the expenses of maintaining the home.

This is basically a loan from the bank that is based on the value of your home. Generally, the loan does not have to be repaid as long as you live in the home.

If you sell your house or move away, then the mortgage must be repaid. These loans (also known as “HEC” loans for “Home Equity Conversions” can be a useful financial resource, but such a loan may not be appropriate.

Before you explore this option with a lender, it’s important to do your
homework (we say “do your homework” on this web site so often that some people feel they are back in school being nagged by their teacher).

But it’s the most important piece of advice we give. Unfortunately, there are unscrupulous lenders and others who see the elderly as prime targets for exploitation.

Important Information Resource for Those Considering a Reverse Equity Mortgage

To promote important standards for the reverse mortgage market, and to help consumers find counselors and lenders who pledge to uphold those standards, the nonprofit National Center for Home Equity Conversion (NCHEC) has established a program to recognize "preferred" counselors and lenders.

NCHEC director Ken Scholen has served as a consultant to AARP on reverse mortgages since 1985. He wrote our "Home-Made Money " consumer guide and our videotape introduction to reverse mortgages. He has also assisted the Association and the AARP Foundation on a variety of related research, training, and public policy activities.

What Is NCHEC?

The National Center for Home Equity Conversion (NCHEC) is an independent, not-for-profit organization established in 1981 to educate consumers about reverse mortgages and related alternatives. It accepts no advertising, donations, or grants from mortgage lenders, servicers, or investors, and endorses no reverse mortgage products.

NCHEC grew out of the first federal research projects on reverse mortgages sponsored by the U.S. Administration on Aging. It originally proposed the reverse mortgage insurance program enacted by Congress in 1987, and developed the total loan cost analysis required by federal Truth-in-Lending law since 1995.

NCHEC director Ken Scholen has specialized in reverse mortgage analysis and education since 1978. He has written critically-acclaimed consumer guides, trained over 4,000 consumer counselors and government officials, and received the Federal Housing Commissioner's Award for his work on reverse mortgages.

What is NCHEC-Preferred?

NCHEC-Preferred counselors and lenders give consumers a copy of the NCHEC Code of Conduct they have pledged to uphold. They also provide consumers with an individually customized Personal Reverse Mortgage Analysis-an independent, objective 13-page report generated by NCHEC computer software covering a range of reverse mortgage choices and other alternatives. In addition:

NCHEC-Preferred Counselors are employees of non-profit or public agencies with at least one year's experience as reverse mortgage counselors. They have pledged to meet the standards in NCHEC's Counselor Code of Conduct regarding disclosure of consumer options and counselor interests, protection of confidentiality, and reporting of financial exploitation.

NCHEC-Preferred Lenders are authorized to offer federally-insured reverse mortgages on an expedited ("direct endorsement") basis, and may offer other reverse mortgage plans as well. They have pledged to meet the standards in NCHEC's Lender Code of Conduct regarding disclosure of consumer options, protection of confidentiality, reporting of financial exploitation, and rejection of objectionable referrals.

For a copy of the current "preferred" list, send $1 and a self-addressed stamped, business size envelope to --

NCHEC-Preferred
7373 147th St.
Room 115
Apple Valley, MN 55124.

To report any suspected violation of NCHEC's Codes of Conduct by any counselor or lender this list, please send details to Ken Scholen at the same address --

Ken Scholen
NCHEC
7373 147th St.
Room 115
Apple Valley, MN 55124.

For more information about Reverse Equity Mortgages and obtaining qualified legal advice, review the articles on the “Importance of Consulting with an Elder Law Attorney” on our Legal page, and “Financing Without Insurance” on our Finance page.

Another excellent on line source of information on this subject can be found at http://www.aarp.org/, the AARP Home Equity Information Center.

Of course, if you have more questions we reccommend you consult our Directory of Elder Care Professionals.

Informed Eldercare Decisions, Inc., provides the following services:

• Health, social & functional assessments to determine the services best suited for each individual.
• Care Planning and care management: arranging & monitoring home & community care, assisted living, nursing care facilities & other services.
• Support for family caregivers who live far from their parents or siblings.
• Advisory services to guardians and conservators.
• Counseling and assistance with methods of financing the high cost of long term care including: Long Term Care Insurance, Reverse Mortgages, Life Settlements and other long-term care financing strategies.

Informed Eldercare Decisions, Inc. is a private company dedicated to helping people make the best choices for long term elder care of their relatives. We are Experts in Long Term Care insurance and Elder Care planning.

450 Washington Street, Suite 108, Dedham, MA 02026-0428, USA
Phone 781-461-9637
Fax 781-461-9638