REVERSE MORTGAGES

This is not a primer on Reverse Mortgages; rather, an overview of my family's experience.

My parents took out a Reverse Mortgage in 2005.  They learned about it from a friend, and I thought it was reasonable. My Dad's health was rapidly declining, and a recent stay in a rehab hospital was incredibly expensive.   They were both in their early 80s, and while my Mom did not have a life threatening illness, she suffered the usual slings and arrows of aging.  I saw it as a crapshoot; chances were good that one or both of them would end up in a nursing home. Their beloved house would be 'liquidated' once they 'spent down' their other assets.

The House on Blueberry Hill

3 Acres, 3 Generations

The above photo shows a rainbow over one of the buildings on our family 'compound.'  Called 'The Barn'. it was the site of an earlier horse barn that then became a plumbing shop/garage with 3 rooms in the upper level.  Which was later renovated as my office, and then our adult daughter used the space to escape close living quarters.  The roof of our house is shown in the right hand corner.
The 'homestead' is a yellow ranch, not pictured.

Pioneer Days

Dad was a WW II Vet, and a gifted mechanic.  His parents were Hungarian immigrants; his Navy education included keeping PBYs in battle-ready condition.  When he came back to CT, he enrolled as a plumbing apprentice.

The house on Blueberry Hill was a heroic quest; he cleared the land, served as general construction contractor, and later added garages and 'The Barn' through ingenuity and sweat equity.

Mom worked full time, which was not the norm in the '50s.  She created beautiful gardens, cooked hot meals everyday and decorated the rooms with charm.

Reverse Mortgages offer a variety of payouts.  My parents selected to get the whole value of the home in a lump sum.  They paid off a small mortgage, kept some money for fun, and gave me the majority of the money.  I held onto it as a cushion if I needed to get nursing care for one or both of them. (My only sibling, a beloved brother, died years earlier. He was cared for in the homestead for 13 years after a traumatic brain injury.)

Fast forward, my Dad died at home in 2007, 2 years after the Reverse Mortgage.  Mission accomplished, he did not have to live out his final days in a nursing home.  Same for Mom.  She died at home, under Hospice care, in 2014.  In her declining years, under the fog of dementia, she got buyer's remorse and wanted to leave the homestead to me -- she even sent $5K to start paying it off!  A lawyer convinced her not to do that again.

My choice was to (1) Sell our house, on the street level of the 3-acre 'compound', and add the money I had been holding from the Reverse Mortgage payout to buy back my parent's property.  (2)  Sell my parent's property through conventional means. (3) Request a 'Deed In Lieu Of' - basically, turn the property over to HUD, who now held the Reverse Mortgage. 

With a heavy heart, I chose door number 3.  After three years of increasing caregiving duty for my Mom, the thought of emptying her house, then getting our house sold, was overwhelming.  As my consulting business was less active during caregiving, my husband and I were not in a position to hold both homes at once. And the house property was now 'underwater.'  Repairs to the roof and to a large drainage pipe aside the long driveway, plus other repairs, plus realtor's fees, would create a loss.  Each month the Reverse Mortgage grew - from approximately $212K to $300K in 10 years.  In the year after my Mom's death, as her executor, I continued to pay hefty taxes, insurance, electricity and heating bills.  I admit, I delayed asking for the 'deed in lieu of' for a couple of months - disposing of 60 years of family possessions, in wintery Connecticut weather, is formidable work.

I've learned that dealing with HUD is a nightmare.  They call, leave a number, then rarely pick up or return your call.  Here in Connecticut, the DMV is known for bureaucratic inefficiency - HUD wins, hands down.  Worst of all, the property becomes like a foreclosure - while we would have had to buy the property for $300K, HUD sold it for $200K - and listed it as a two-family, which violates our zoning area. Our neighbors will be knocking at Town Hall if the new owners try to rent out 'The Barn' - which does not have a standard sewer hook-up or a full size kitchen.

This is the 'End of an Era' for me.  I am glad my parents got to live out their lives at the home they worked so hard for; they enjoyed close to 60 years of their American Dream.   My advice when considering a Reverse Mortgage is to realize your home could ultimately be sold by the government.  No rainbows in that scenario!