Annie:

Hi everybody. I’m Annie. I’m back again and we’re talking reverse mortgages again because honestly I always think there’s so much confusion and I think they’re really a great financial product. Today I’m talking to Ann Lewis at Federal Savings Bank. She’s a wealth of knowledge and I’m excited for you to hear the interview. So here we go.

Hi Ann.

Ann Lewis:

Hi Annie. Good to see you again.

Annie:

Yay. I know, I love seeing you. I love sharing clients with you. Makes it so much more fun.

Ann Lewis:

Yes.

Annie:

And I trust you. I trust you. So it’s so great. But Ann, let’s tell everybody, give us a little bit of background about you and your story.

Ann Lewis:

Good to be here, Annie. Thank you so much. Yeah, I’ve been in residential mortgage lending for about 30 years now in the South Bay area. Have helped a lot of customers purchase and refinance and lines of credit and all that goes with it. I started with reverse mortgage because I had a few clients a number of years ago that were looking into it and they came to me for advice about it. I didn’t know anything. I had really a dim view of what it was. I kind of didn’t have all the facts and kind of had my mind a little bit made up of what I thought that I knew about it.

So I had a client that wanted me to walk her through her transaction. She didn’t know the loan officer that was helping her. She kind of was really not sure about it. So I was pretty much determined that it wasn’t a good idea for her to do and I was going to kind of, in my mind, talk her out of doing it. But what I found was it was like the exact opposite. She definitely found a product that was good for her and really, really alleviated a lot of stress that she was having, really making cash flow. She had lost her husband, his social security income had gone away. So here she was trying to fund a long retirement for herself and was really falling short. And so this really gave her a lot of breathing room. And so that was the start of it. And I just started to help more people that were come to me wanted to cash out. They needed bandaid fixes.

And for seniors that were in retirement, it was getting harder and harder to do because they had to be qualified. So this has just opened up a really good just avenue to help people and that’s what makes me so just driven by it.

Annie:

Yeah because you actually just brought something up that I think a lot of people are so much more comfortable just refinancing and cash out, doing the HELOC or something like that. But with traditional mortgages, it’s harder for seniors to get those where the reverse mortgage is tailored for people that probably are in retirement with, I’m guessing a lot of equity in their house. So it does alleviate some of that burden of showing proving income. Right?

Ann Lewis:

Yeah.

Annie:

That’s the huge difference.

Ann Lewis:

Yes, because there is no mortgage payment. She had a small mortgage to pay off and the reverse mortgage that replaced the one that she had took that payment away for her and really helped her situation out.

Annie:

Oh my gosh.

Ann Lewis:

Yeah.

Annie:

I mean, so many people can’t wrap their brain around the fact that they’re getting money, they’re borrowing money, but they don’t have to pay it off monthly. I mean, that’s the beauty for someone, a senior, you alleviate that stress. And so that’s interesting. So she helped pay off her current mortgage and then maybe had some extra money or something too to help, so that’s awesome.

Ann Lewis:

Yes.

Annie:

Yeah, it’s got to be really interesting the reasons people come to you for a reverse mortgage.

Ann Lewis:

Yeah. And they’re varied. It’s definitely customized, and I think when people hear reverse mortgage, they kind of think of one of thing it can do if you’re not sure, but really it is very customized to someone’s individual needs versus the next person’s individual needs. They can use it to pay off an existing mortgage, not have one anymore. They can use it to receive a cash to their pocket in one lump sum, maybe to buy a car, pay off high debt, maybe help a grandchild in college, things like that.

And also, they could also set up a line of credit that they can use in the future and look at that as something that they can use as a nest egg. They might not have to even tap it right away or even ever, but just to know that it’s there. And the big difference between the reverse mortgage line of credit and the regular line of credit is the reverse line of credit will never go away and it will grow.

The limit actually grows over the course of the life of loan, which is just magical for some people. Just to know that you have that option. I have seniors coming to me a lot that want to do replace the old equity line, and we’re constantly asking about those, but that comes with the payment and you can only draw on them for 10 years. So once that draw period is over, then they have to pay it back. And that could really lead to some problems for some people.

Annie:

And that’s the regular HELOC type of loan, but the reverse mortgage line of credit, there isn’t a timeframe. Correct?

Ann Lewis:

Correct.

Annie:

Okay.

Ann Lewis:

It stays on there for as long as they’re in the home and as long they need it for. A reverse mortgage is based on using the home. This is your primary residence and that’s one of the rules is that you have to live in and maintain your home.

Annie:

Yeah. And that’s fair. So basically they’re using their home as the collateral. Here’s the thing. A lot of times I hear people think that, “Well, what happens? What if the bank just comes and they say they want me to pay it all back and I’ll lose my house?” I mean, that’s not going to happen. Right? They’re not going to-

Ann Lewis:

No, no, the home … Also, I think one of the misconceptions too about it is that the bank owns the home and they somehow have to come off of title or they’re no longer. But no, they are on the title, they are the owners of the property, just like any other mortgage loan that you would get. You could have your home in a trust as well. So that’s kind of a misconception, but the bank can never go and say that we’re going to take away that line of credit because it’s backed by HUD, it’s an FHA product and it’s backed by HUD and it will never grow away and will continue to grow.

Annie:

I mean, my gosh, it just seems so, it almost seems silly not to get one, just even if you really don’t have the need. If you’re sitting on a goose egg, I always call it the golden goose egg. People have so much equity in their house, why not have this as protection essentially?

Ann Lewis:

Yeah.

Annie:

And yeah, I just see so much good about these things that it’s just glad we’re sort of highlighting that they can be such a great product.

Ann Lewis:

Yes.

Annie:

Do you see many people needing monthly income from this as opposed to just a safety net? Do they just need some extra each month?

Ann Lewis:

Yeah, and that’s another option of the reverse mortgage. Another facet of it is that, say you did need monthly income coming into you. Say you had insurance premiums that were increasing and certain things in your life that were now increasing, you can use the reverse mortgage to also receive money to your pocket.

So there’s all these different ways to make it work. It’s just up to the person helping the customer to actually listen to what their needs are and how it would help them. And it comes with a lot of questions that you need to ask them and then listen to what it is and then figure out what is going to be the best solution and compare them. The software that we use, it comes up with three different choices and they get to see all of that. And it’s just really helpful to pick and choose. And usually people align with one or the other.

Annie:

I love it. Yeah, that’s really great. That’s what I really like to do is to take a scenario and see that breakdown so people really get the nuts and bolts of what the options do look like.

Ann Lewis:

Yes.

Annie:

Why don’t we do that in the next video, if you’re up for that?

Ann Lewis:

Yeah, I could go over some of the numbers and the papers and everything.

Annie:

Yeah, why don’t we do that? So I’m going to thank you so much for your time today. I think it’s just so helpful for people to know that there’s a lot of good in the reverse mortgage world. The bank’s not going to steal your house and they’re not taking all your money. So I really appreciate some of that feedback and that information, Ann.

Ann Lewis:

You’re so welcome, Annie, and thank you so much for having me. The reverse mortgage was redesigned in 2014 and they put a lot of protections in place for people.

Annie:

Oh, I got it. Yeah.

Ann Lewis:

They’re a lot different now than they were before, so it’s just nice to have that and be able to share it with people and educate them about it.

Annie:

I love it. Well, everybody, Ann Lewis, all her contact is here. Reach out, Ann can help you, reach out to me if you have any real estate questions or if you need anything. We’re both here to help you and I look forward to talking to you on the next one, Ann.

Ann Lewis:

You too. [inaudible 00:10:21] Take care. Talk to you later.