As adult children become less debt-adverse and more involved in their parents’ finances, originators are noticing more receptivity and engagement from borrowers’ children during the reverse mortgage loan process.
Laurie MacNaughton, a reverse mortgage specialist with Atlantic Coast Mortgage in the Washington, D.C. area, says more adult children are picking up the phone and making the initial inquiry about the loan.
“It has always been true to some extent, but now it’s really noticeable,” she tells RMD. “Over the past year or so about 30% of my initial contact with a family has come through adult children of aging parents.”
Beth Paterson, executive vice president for Reverse Mortgages SIDAC, says she has had two recent instances where adult children were the ones to get the loan process started. In one case, a daughter called on behalf of her mother who has Parkinson’s and little attention span, Paterson says.
“The mom is insisting on staying in the home,” Paterson says. “So the daughter will use her power of attorney. They’ll use the reverse mortgage to pay for care and stay in the home.”
In another, a daughter reached out to Paterson after her brother took over their father’s finances. After seeing how tight the father’s financial picture is, they are now exploring the benefits of a reverse mortgage.
“The children are calling because once they see their parents’ financial situations they are realizing [what it looks like] and then saying, ‘We need to do something,’” she says. “Or the kids have been trying to help and can no longer afford to do so.”
MacNaughton agrees and says many of the adult children she interacts with struggle to support both their parents and their own financially dependent kids.
“Being squarely in the sandwich generation, their finances are already stretched, but despite this many have spent large sums assisting aging parents,” she says. “In many cases the reason they pick up the phone and call me is because they are no longer financially able to carry the expense, and now are searching out alternatives.”
Furthermore, as the adult offspring now tend to be young boomers or the oldest Generation Xers, MacNaughton says heirs are less debt-adverse and don’t immediately reject the idea of a mortgage.
“Once the adult children understand reverse mortgage, they speak with their aging parents,” she says.
Ellen Skaggs, reverse national sales manager for New American Funding, says that the majority of children she sees representing parents are daughters.
“Secondly, it is usually only one child that works and speaks for the parents,” she says. “Very rarely is the whole family involved.”
Malcolm Tennant, the president and co-founder of Access Reverse Mortgage Corp. in Clearwater, Fla., is also seeing more activity from children and grandchildren. He is working on two reverse loans that were initiated by these younger generations.
“I find the borrowers are more at ease having the reassurance that their child or grandchild has researched the program and researched our company,” he says. “Borrowers are also more comfortable knowing that their heir is comfortable with the program and loss of inherited equity.”
Marketing to family
Along with a shift in generational mindset, originators credit the increase to their more expansive marketing plans, where reverse mortgages become part of an even larger retirement conversation.
“There might be many reasons for this, but in my case I believe the biggest contributing factor is that only rarely do I address groups of older homeowners,” MacNaughton says. “Rather, I invest a significant number of hours each week to teaching professionals in related industries — home care, real estate, estate law. Consequently, when I ask class attendees for scenarios, often they personalize information by thinking through their own parents’ situations.”
Paterson says she feels that her marketing plan connects with adult children.
“I use a lot of social media so that goes to all ages,” she says. “And I use referral sources, advisors, home care companies, and other sources that work with families.”