Reverse mortgages are on the radar of those approaching or in retirement. This group may be facing higher health care costs, enjoying a longer post-retirement life, helping grandchildren with college expenses, or shaping an inheritance. Unfortunately, there are few solutions for this group’s financial challenges. At least a third of seniors rely on social security as their sole source of income, retirement funds have suffered during the recession, adult children supporting their parents are becoming strapped for cash, and credit availability puts loan solutions in short supply.
Now is a good time to look at whether reverse mortgages fit in your credit union’s mission. As you embark on your analysis consider the following:
1) Demographics. With more than 70 million workers on the precipice of retirement, there is a coming flux in seniors looking for sources of supplemental income. Further, your current members may have parents for whom they are a source of income. Look outside your current membership to see if there is a need your credit union might satisfy.
2) Purpose. Does the reverse mortgage fit in to your credit union’s mission? Is this a need your credit union should meet?
3) Market. Do other lenders in your market offer reverse mortgages? Are they effective at cross-selling retirement services? Are you comfortable having other financial institutions selling to your members?
4) Expertise. Is your staff skilled at working with seniors to determine if a reverse mortgage is a good option? Can your credit union sustain the volume required to help develop that expertise? The skills and knowledge required to make a reverse mortgage are different from a standard mortgage.
5) Partnerships. If you do not have the internal expertise, are there potential community partners who can identify and articulate the needs of seniors while you build your knowledgebase?
6) Public relations. Reverse mortgage’s shady past means your credit union will have to proactively manage public reception.
There is a pressing need for reverse mortgages, and your response to that need is important. Ron Felder of Patelco Credit Union says the reverse mortgage is “another tool in our toolbox,” so give it fair consideration.