Used Cautiously, a Reverse Mortgage Can Be a Life Saver
By Megan R. Weeden

When 82-year-old Jean Brown began receiving foreclosure notices in the mail, she was scared of losing the Marstons Mills, Mass., home where she’s lived for almost 30 years. She didn’t know where to turn for help.

Family member Meg Chaffee made a few phone calls and began exploring options. Eventually, she was led to Paul Rubin, AAA Southern New England’s Reverse Mortgage Consultant.

Mr. Rubin told Ms. Chaffee about reverse mortgages, loans available to homeowners age 62 or older. The loans permit owners to borrow against their houses, but do not require repayment until the borrower moves out of the home or dies. The loan is repaid with the proceeds from selling the house.

“As we looked further into the situation, it seemed like we were going to be short in stopping the foreclosure and it might not work after all,” Mr. Rubin said. “We worked with Meg to raise the money Jean needed to stop the foreclosure. We hand delivered the check to the bank less than 24 hours before the foreclosure.”

The loan money can be used in a number of ways, including supplementing Social Security, travel, purchasing a new car or second home, paying for a grandchild’s college education, or to make necessary home repairs.

“The reverse mortgage allowed Jean to stay in her house,” Ms. Chafee said. “We were so relieved when Paul called us to tell us the loan was all set. We didn’t know where else she would go.”

Reverse mortgages are not for everyone, cautions Deborah Imondi, Vice President of AAA Southern New England Bank. “We encourage people to talk to someone they know and trust about the program and to look at their own individual circumstances. For those who can use it, it gives them a new way to live their life.”

Things to consider include the cost of the loan, since the fees associated with a reverse mortgage can be expensive.

“The costs, which are rolled into the loan, are mitigated over time. If the person is planning on selling their home in the near future, or health concerns may cause the need to move into a nursing home soon, this loan probably isn’t for them,” Ms. Imondi said.

All loan recipients are required to go through independent counseling prior to the closing to ensure they understand the program.

“Reverse mortgages have helped a lot of people age in place and stay in their homes,” Ms. Imondi said. “We try to make people very comfortable by letting them know what reverse mortgages are designed for and informing them of the pros and cons.”