Jeff Taylor, the former longtime leader of Wells Fargo’s reverse mortgage division, had a stock answer when applicants declined a reverse mortgage because they felt the rates and fees were simply too high. Taylor had done the research for his own mother and decided the reverse mortgage was the best strategy to keep his mother comfortable in her later years.

"Too high compared to what?" Taylor would say. "Selling your home, paying the closing costs, and then attempting to find another acceptable place? Have you ever tried to find a senior an acceptable place — especially if that person is a member of your family? If you did, good luck on being able to afford it."

I thought about that answer the other day when a recent AARP study (the group formerly known as the American Association of Retired Persons) revealed that 31.6 percent of seniors have experienced a substantial decline in their homes’ values in the past three years, and a fourth have exhausted their personal savings.

Among the findings in "Recovering from the Great Recession: Long Struggle Ahead for Older Americans" was that 66.6 percent of the 5,027 respondents at or approaching retirement age have had to tap into their retirement savings accounts during the past three years. A quarter of those polled had exhausted their personal savings, making them even less prepared for retirement.

If those older borrowers had taken out a reverse mortgage three years ago, chances are they would not have exhausted their personal savings or tapped as much into their retirement accounts. They could have had a lump sum reverse mortgage, a monthly draw, a line of credit, or any combination of those, yet have made no payments.

A reverse mortgage historically has enabled senior homeowners to convert part of the equity in their homes into tax-free funds without having to sell the home, give up title, or take on a new monthly mortgage payment. Reverse mortgages are available to individuals 62 or older who own their home.

The homeowner can never owe more on the reverse mortgage than the value of the home. If the home continues to go down, and/or the senior spends more than the home is worth, the senior will never have to come out of pocket to repay the lender.

Never owing more than the value of the home is one of the reverse mortgage’s "four nevers." The three others are: payments are never required; the use of funds are never restricted; and the lender never takes title to the property.

Most seniors want to age in place, staying in the home they have now. How do you put a price tag on the anxiety of leaving their longtime home and the fear of finding a new one that meets their needs and expectations? Reverse mortgage funds can help them stay put and close to their friends, church and familiar environment.

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