Overview presented at American Bankers Association Real Estate
Lending Conference this week
ARLINGTON, Va. & BLOOMFIELD, N.J.–(BUSINESS WIRE)–Older homeowners have considerable financial worries, but most do not
see tapping their home equity as a strategy for creating greater
retirement security, according to the results of new research released
today by the National Council on Aging (NCOA) through its subsidiary
NCOA Services LLC.
Jay Greenberg, ScD, CEO of NCOA Services, and Michael Mooney, sales
leader of the Financial Institutions Group at Reverse Mortgage Funding
LLC (RMF), which funded the research through a grant to NCOA, will
present an overview of the findings at the American Bankers Association
Real Estate Lending Conference in Orlando, FL, this week.
Conducted over eight months, the research gauged the interest in and
understanding of home equity products among older homeowners and
financial advisors. It relied on feedback gathered through focus groups
with 112 consumers aged 60-75 and two comprehensive surveys of 254
financial advisors and 1,002 older homeowners.
Home Equity: An Overlooked Opportunity
The research found that retirement concerns loom large for consumers as
they age. Most cited rising medical expenses (91%) and outliving
retirement savings (83%) as their principal concerns. Four out of five
respondents also expressed a desire to stay in their homes for as long
However, when considering financial preparedness, consumers focused
primarily on accumulated assets such as 401(k) accounts, pensions,
annuities, and savings. Even though their homes can represent as much as
80% or more of their net worth, older people generally overlooked or
were unwilling to consider home equity as a retirement asset.
The research also revealed that both consumers and financial advisors do
not have a full understanding of two common home equity products—a
Reverse Mortgage Line of Credit and a Home Equity Line of Credit.
“For most older people, the use of home equity in retirement is not a
question of if, but when and how,” said Greenberg. “We need to do a
better job of educating consumers about the products available and how
best to use their homes as a strategic asset as they age.”
What’s in a Name? Plenty When It Comes to Home Equity Products
To gauge their receptivity to and understanding of a Reverse Mortgage
Line of Credit and a Home Equity Line of Credit, consumers and financial
advisors were presented with both home equity products and asked which
best met their retirement needs.
Interestingly, when the product was described but not named, 58% of
consumers and 43% of financial advisors preferred a Reverse Mortgage
Line of Credit over a Home Equity Line of Credit. Conversely, when both
products were named, 68% of consumers and 37% of financial advisors
reversed course and preferred a Home Equity Line of Credit.
Once aware that the unnamed product they liked was a Reverse Mortgage
Line of Credit, a majority of participants still preferred the product
and acknowledged a lack of education and understanding about the option.
To fill this information gap, participants said they were open to advice
from a trusted source on using home equity to help fund retirement.
The research also revealed that among financial advisors, there is great
disparity in the level of knowledge and comfort among this group about
Reverse Mortgage Lines of Credit, indicating a need to educate these key
influencers about the home equity product, as well.
Craig Corn, CEO of RMF, said, “The study demonstrates that greater
education and guidance about home equity release solutions is needed to
help consumers and financial advisors make the right choice for their
individual and clients’ needs. As an organization with older Americans’
best interests at heart, we see firsthand how the Reverse Mortgage Line
of Credit positively impacts the lives of people who fully understand
the product and its features. Continuing to drive education about home
equity release products is critical to helping ensure this growing
demographic segment is able to retire comfortably and confidently.”
NCOA’s research suggests that further education among consumers and
financial advisors about home equity solutions is warranted. The
findings also corroborate a 2016 study conducted by The American College
of Financial Services titled The
Home Equity and Retirement Income Planning Survey. This research
revealed that retirees are generally misinformed about the Reverse
Mortgage Line of Credit and how the product can be used as part of their
retirement income planning process.
For more information, including a fact sheet with more detailed results,
please visit www.ncoa.org/HomeEquity.
The National Council on Aging (NCOA) is a respected national leader and
trusted partner to help people aged 60+ meet the challenges of aging.
Our mission is to improve the lives of millions of older adults,
especially those who are struggling. Through innovative community
programs and services, online help, and advocacy, NCOA is partnering
with nonprofit organizations, government, and business to improve the
health and economic security of 10 million older adults by 2020. Learn
more at www.ncoa.org
About NCOA Services LLC
NCOA Services is a wholly owned subsidiary of the National Council on
Aging (NCOA). Its mission is to improve the health and economic security
of millions of older adults and help make NCOA an enduring organization.
NCOA Services is a social enterprise that partners with both for-profit
and nonprofit organizations to develop creative solutions to address the
challenges of aging in America and bring them to scale nationwide. Learn
more at www.ncoa.org/NCOAServices.
About Reverse Mortgage Funding LLC
Established in 2012, Reverse Mortgage Funding LLC (NMLS ID #1019941) is
one of the fastest-growing lenders in the industry, one of the nation’s
largest GNMA issuers of reverse mortgages, and a recognized thought
leader in the reverse mortgage business. A wholly-owned subsidiary of
Reverse Mortgage Investment Trust Inc. (RMIT), the company’s focus is on
originating, acquiring, investing in, and managing reverse mortgage
loans and securities backed by reverse mortgage loans. The company is
headquartered in New Jersey, with corporate offices in New York and
California and field offices throughout the U.S. Learn more by calling
(844) 804-3863 or visiting www.reversefunding.com.
Follow Reverse Mortgage Funding LLC on Facebook at www.facebook.com/reversemortgagefundingllc
and on LinkedIn at www.linkedin.com/company/reverse-mortgage-funding-llc.