IT'S 5:00 AM, MY CAR IS STOCKED WITH CONSUMER
guides, materials for professionals, a variety of technology
and needed chargers to keep me plugged-in throughout
the day, plenty of coffee and, last, a loan application.
It's been nearly five years since my first contact with
Debbie Young. Back then, her local banker called me to
consider reverse mortgage benefits for her and her husband Mick. Like many retirees, Debbie and Mick had
been doing fine. They had saved, budgeted and planned
for their retirement. They owned a beautiful home on one
of our pristine Minnesota lakes where they lived a life full
of hobbies, family and philanthropy. But health issues and
the associated (mounting) bills had changed their
financial situation. At the time, eliminating their monthly
mortgage payment would have given them the wiggle
room they needed, plus a stand-by credit line ready for future shock events.
Mick had been an engineer during most of his working
years, trained to anticipate (and hopefully avoid) any possible pitfall or defect by ensuring he had an understanding
of every moving part. As you can imagine, he analyzed the
workings of a HECM with the same critical view as he
had examined schematics of jet engines for Boeing years
ago. Mick needed to understand the details: “Show me
where I can find information on the LIBOR rate and how
it has performed historically.” “Explain how the principal
limit and expected rate are calculated.” “What are the
average property appreciation values (historically and currently) nationally and in my community?”
I was able to give Mick access to the technical details
and supplemental literature to educate and satisfy his
thirst for knowledge. He thanked me profusely for taking
the time needed for him to feel comfortable and confident
in his decision to proceed toward application.
Debbie, on the other hand, is a creative and social
being, uninterested in the minute details. She was most
curious about how the reverse mortgage could affect their
future and ownership. She asked the more common questions we hear from our clients: “What happens if one of us
dies?” “What if we’re no longer able to live here or need to
move to convalescent care?” “Are we giving up ownership to
our home?” And, “What the heck is a HECM?”
I showed Debbie how a reverse mortgage is similar to,
and how it differs from, the traditional mortgage they have
now. I ran several financial scenarios to show her the flexibility of payout options and how the product was designed
to conform to their needs as they change over time (providing we have equity to work with). She was very pleased that
she would have the option to supplement income and
remain in the home for a while if Mick should pass away.
“I can’t imagine what widows go through trying to handle
all the bills and ongoing maintenance with less income while
they’re also grieving the loss of their partner,” she said. I had
no idea at the time how essential this statement of under-
standing would be for Debbie’s future. After educating and
speaking with the couple, their attorney, their banker and
their children, the Young's scheduled their mandatory third-
party counseling session with a HUD-approved and tested
counselor as well as a time to meet with me to sign a
But just before our application appointment, their
daughter and her husband decided to “rescue” their parents.
They offered their own type of reverse mortgage for Mom
and Dad: The family deeded the property to the kids, Mick
and Debbie continued to live there, but now as tenants.
The kids paid the mortgage payment and associated costs
for the home, offering Mom and Dad the life they were
accustomed to, no more monthly mortgage obligations,
and instant liquidity. What a great family.
Four years later, I received a phone call out of the blue:
"Well, Miss Passarelli, you won't believe who this is."
“Debbie?” I said. Who could forget her smooth, sultry
voice fit for a stage in a jazz club?
Debbie spent an hour briefing me on how her life had
changed since we last spoke. She had suffered a brain
aneurism and her beloved Mick had passed away. Her
daughter and son-in-law had begun divorce proceedings.
Debbie had endured long months in physical and occupational therapy and many tearful days grieving Mick’s death.
She’d recovered and decided she loved her life at the lake
and wanted to age in place if she could. But things were
“a little messy” now with her daughter’s marriage dissolving.
Their family plan was no longer viable.
“I didn’t call you to depress you
about my woes,” she said. “I wanted to
see if there’s still hope for a reverse mortgage to continue my life as I know and
love it here at the lake. I remember when
you and I discussed that this might be
a safe way for me to potentially stay
where I am for a while if Mick should pass away.”
I’ve learned that the cycle of loans we originate can be
years in the making. If Debbie hadn’t known about reverse
mortgage as an option, she’d have been scampering to sell
her home under duress unnecessarily, or feeling the pressure
of possible foreclosure. I’ve seen prideful clients struggle for
months and wait for a foreclosure notice before finding their
way to me from a foreclosure prevention counselor. For
homeowners who have a firm handle on their finances, this
is an indignant survival approach to maintain stable housing. But when we have the opportunity to educate borrowers on their options, a reverse mortgage becomes a choice,
rather than a last resort to “save” their home.
As an industry, our intent is to make sure that senior
homeowners know a reverse mortgage is a viable financial
tool that will prepare them for the “what ifs” life throws
their way. Although we can offer an effective product of
“last resort,” it works better if it’s already in place and available “on demand” when life throws a curve ball. Debbie
would’ve been best served with this financing already in
place. But just the fact that she knew it was an option gave
her the comfort of knowing there was an available alternative to selling “quickly and desperately.”
I reacquainted Debbie with the mechanics of reverse
mortgages and surprisingly, she had absorbed and retained
most of the information we covered years before. “Tell me
again what I do when I decide moving is the right choice
for me. How exactly do I do that with a reverse mortgage?”
I showed her how her payoff would be calculated, that
her home could be sold with the same steps involved as if
there were any other type of mortgage on her home, and
how her proceeds from the sale could be used as a down
payment on the next chapter of her life. I also explained
how a reverse mortgage could help her finance that purchase. She was thinking she may want to purchase a condo
in Florida near her closest friend from college.
“That sounds like a great plan!” I told her. “Ocean view,
no more hard winters and an association to handle the
maintenance. Sounds lovely!”
After reviewing her income, mortgage balance, estimated property value and current budget, it appeared that
a reverse mortgage could supplement her lifestyle for an
additional eight years or more. “Eight years! That’s a blessing,” she said.
“And the equity you’ve retained can be used to help you
buy that condo in Florida,” I explained.
“You’ve given me the peace of mind I needed and I’m
thankful I don’t have to sell my lake home today. What do
we do next?”
First step: Unravel the family plan and put Ms. Young
back in the driver’s seat.
After months of work on her part, Debbie is once again
an owner and trustee, as opposed to a tenant. The property
she has enjoyed for 20 years as a mother, grandmother, wife
and now a widow, is in her name again. She has been counseled and is excited to be moving forward. For a woman
who "never handled the finances," I'm proud of all she has
accomplished in just a few short months to make a reverse
On the day I plan to reconnect in person with Debbie,
I spend my morning, training the staff of a small community bank in reverse mortgages, scamper to a kitchen table
meeting with another couple referred to me by a financial
planner to review their reverse mortgage benefit summary
and discuss options for their family, then lunch with the
referring financial planner to update him on his client and
At 2 pm, I pull into Debbie Young's driveway for her
application appointment. Before I can open my car door,
Debbie and Buster, a 100 lb. Burmese Mountain dog, are
charging towards me from the house. She greets me with
the kind of hug you get from a grandmother—too tight,
too long, but full of genuine hospitality. As we walk
through the door the hot dish she made to take to church
tonight smells amazing. Her beautiful home looks exactly
as I remember: a modern cabin built to exploit every possible lake view and brimming with memories of vacations,
family and hobbies. However, her master bedroom has
transformed to accommodate her latest form of philanthropy — gift cards for those in the hospital or convalescent
care to give to others.
“I’ve found when I’m down and out, what makes me
feel best is giving. For the folks who are in facilities for a
short stint or indefinitely, life outside is still happening!
They feel empowered and connected when they can send a
congratulations card to a niece who had her first baby, or
to a friend who’s grieving,” says Debbie.
I think Debbie Young is remarkable. I’ll pen a letter of
explanation for the underwriter who’s sure to question why
the master bedroom looks more like a Hallmark store than
a place for slumber. I’m guessing sleeping in the guest room
is where she’s most comfortable for a while. She shows me
to Mick’s office above the garage, where he ran his golf club
exchange business for years. She hasn’t
been up there since his death and shouts
from the bottom of the staircase, “I hope
it’s presentable for the appraisal, I’m really
not ready to re-purpose that room yet.” I
reassure her it looks great.
We eventually settle in at her kitchen
table overlooking the lake to sign her loan application. She
tells me about her fun group of friends who’ve gathered at
that very table for dinner every month for 15 years. She
points out the nest where a pair of loons raise a family every
summer. She shows me which chair she sits in for the best
vantage point to watch the sun rise. In her buttery voice
Debbie says, “Is it hard to see why eight more years here
would be a blessing?”
“Not at all,” I reply.
(To protect the privacy of our clients, names have been changed,
except Buster the dog. His name is actually Buster.)