Reverse Mortgages Now Available to More People in Larger Amounts

Reverse Mortgages: The Choices Expand
By KELLY GREENE and VALERIE BAUERLEIN
November 13, 2007; Page D1

Only a year ago, homeowners interested in reverse mortgages had little to choose from beyond the plain-vanilla, government-backed products that have long dominated the market. Such mortgages essentially allow homeowners at least 62 years old to sell a large chunk of their home equity back to a bank or other lender in exchange for a lump sum, monthly payments or a line of credit.

Now, nearly a dozen large banks and mortgage lenders have launched reverse-mortgage products with lower fees and larger payouts. One lender has reduced the minimum age requirement to 60; others are making loans on second homes and vacation rentals. "Jumbo" reverse mortgages -- for houses valued at as much as $10 million -- are becoming more common.

With a reverse mortgage, instead of the borrower making payments to the lender, the lender makes a payment or payments to the borrower. The borrower keeps control of the house and doesn't have to pay back the money as long as he or she lives there. When the homeowner dies or moves out, the loan is typically paid off by selling the house, and any money left over goes to the homeowner or the homeowner's estate.In the past, the reverse-mortgage market has been constrained by having one main buyer, Fannie Mae. But a half-dozen investment banks, including units of Lehman Brothers Holdings Inc. and Bank of America, have started buying reverse mortgages in the past few years, with plans eventually to package and sell them.

On Thursday, Ginnie Mae, the federal agency charged with making real-estate investment more attractive to institutional investors, said it's rolling out a standardized government bond issue backed by reverse mortgages -- a key step in creating a secondary market that could help lower borrowers' costs and increase the loans' availability.

Read the entire article at : http://online.wsj.com/article/SB119492066401290839.html

Supply of Eldercare Services Will Not Be Sufficient to Meet Future Demand

In several earlier posts I have commented on how there is finally awareness of the growing unmet need for eldercare services nationwide. That need will soon grow to unsustainable levels as Baby Boomers are now reaching the age of Social Security eligibility (at a rate of more than 1 every 7 seconds for the next 20 years.

In one of my June posts to this blog, I cited some of the statistics that describe the huge scope of the "Eldercare in An Age of Scarcity" issue that is the focus of this blog. The collection of ABC reports-including some recommended videos-on the challenges that face those who are struggling to balance work and elder care issues are still available at their web site

Not only is the increasing demand for eldercare services and caregiver support services for their 80-90+ year old parents difficult to meet with our current eldercare service infrastructure, the deficit and debt levels of states and the federal governments to pay for such programs as Medicaid and Medicare require a reduction in spending on eldercare services at a time when the needs are growing at an out of control rate.

An article in the New Hampshire newspaper Foster's Daily Democrat, reports that assisted living and other facilities are scrambling to meet the anticipated demands and varying needs of the Baby Boomers

"The baby boomers are the 'Burger King generation,' and they are going to want assisted living their way," said Howard Chandler, executive director of the Taylor Community in Laconia, NH."

The Boomers may want it their way but for most they'll be lucky to be put on a waiting list for an underfunded and understaffed long-term care system. Assisted Living facilities are a far more attractive alternative to placement in a nursing home. However, few are publicly funded and the overwhelming majority of Assisted Living units cost an average of $3500-$6000 per month depending on the size of the unit and the amenities provided by the facility. The majority of these units are only available to those who can pay for them out of their own resources.

In September, the U.S. Department of Health and Human Services announced it was dedicating $5.7 million in matching grant funds for nursing home diversion programs. While this sounds like an expansion of services, all it is a shift of funds away from already underfunded nursing homes to pay for a modest amount of home care services. 4 -6 hours of daily home care costs an average of $80-$100.

"But no matter how the money is allocated, Medicaid still doesn't reimburse the full cost of services, Pohlman said, noting that Maine's Medicaid shortfall nearly tripled from 2004 to 2005, from $10 million to $27 million." According to the Daily Democrat.

Some in New Hampshire are skeptical about the effort to divert patients from nursing homes.

Strafford County Administrator Ray Bower, whose duties include overseeing the Riverside Rest Home in Dover, said while the number of seniors is expected to increase in New Hampshire, the number of nursing home beds won't because of a moratorium on adding new nursing home beds in the state. .


Source: http://www.fosters.com/apps/pbcs.dll/article?AID=/20071111/GJNEWS_01/711110059

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“I've Seen The Future — And You Don't Want To"

Lauren Kessler had a thought provoking piece in the Portland Oregonian last week (November 7) that I encourage readers of this blog to review.

Kessler says that even tough baby boomers often are in the position of being caregivers to frail older family members, they are not getting the message that the unpleasant reality that they see when they visit a long-term care facility is very likely to happen to them.

“I've seen the future says Kessler, — and you don't want to…you've seen the future, too, if you've tried finding, managing or paying for the care of an ailing, aging parent.

Let's say you found one that was clean and safe, that was close enough for regular visits. …It's a good place. But admit it: Every time you visit, you can't wait to leave. This will never happen to me, you vow under your breath on the way to the car.”

She says that even though we like to imagine a vigorous, stimulating old age for ourselves, that’s not the reality.

“… the statistics are against me, against us” says Kessler. The longer we baby boomers live, the more chance we have of falling prey to something that will erode ability to live the future we imagine. If AARP statistics are correct, only about a quarter of us will be living unassisted in our old age. The rest of us will be in continuing-care retirement facilities and assisted-living residences and adult foster care homes or, if we are not as fortunate, in nursing homes or memory care facilities. You know, those places our parents now live in, the ones we visit, the ones we can't wait to leave. This is what's in store for us unless we — the much-vaunted generation that sought to revolutionize just about everything — revolutionize elder care.”

She describes life in one typical long-term care facility and notes that even though the staff do their best, none of us would want to live there.

“The reason you or I wouldn't want to live at Maplewood — or thousands of other elder-care facilities in America — is that the place is seriously understaffed and the staff seriously overworked.”

You can find the full article at: ind this article at:

http://www.statesman.com/opinion/content/editorial/stories/11/07/1107kessler_edit.html

You can also isten to this article or download audio file