John Marttila has seen his share of slam-dunk winners and woeful losers.
The leader of Boston-based Marttila Strategies, a public-opinion research firm, has worked for a wide variety of elected officials in all regions of the United States, including Vice President Joe Biden, former presidential candidate John Kerry, Massachusetts Gov. Deval Patrick, and other members of the U.S. House and Senate.
The company also was employed to measure and promote numerous successful ballot issues around the country.
But seldom has his research produced a more satisfied contingent as those his company polled regarding their experiences with reverse mortgages. While the financial product received a black eye for early versions that included an equity share with the lender, Marttila Strategies’ recent survey revealed that today’s seniors are extremely happy with their reverse loans.
"Rarely does a research program provide such decisive results as this one has," Marttila told Lew Sichelman of National Mortgage News. "These attitudes belie the negative accounts that have been widely reported in the media."
Some of the recent negativity surrounding reverses has come from adult children who have seen their folks swayed into buying questionable annuities with their reverse mortgage funds. While reverse mortgages had a reputation for sky-high costs, rates and fees have come down. Fixed-rate programs are now in place, and counseling is mandatory before any loan can be processed.
Reverse mortgages are available to seniors aged 62 and older who have significant home equity. They are designed to enable elderly homeowners to borrow against the equity in their homes without having to make monthly payments, as is required with a traditional "forward" mortgage or home equity loan.
Under a reverse mortgage, funds are advanced to the borrower and interest accrues, but the outstanding balance is not due until the last borrower leaves the home, sells or passes away.
Borrowers may draw down funds as a lump sum at loan origination, establish a line of credit or request fixed monthly payments for as long as they continue to live in the home. Homeowners also have used a combination of those plans, for example a lump sum at closing with an ongoing credit line.
When the house is sold, or the last remaining borrower dies or moves out of the home, the loan amount plus the accrued interest is repaid. The borrower can’t owe more than the value of the home.
Marttila Strategies issued three national surveys and conducted six focus groups to determine how three different cohorts felt about reverse mortgages.
The groups included adult children with at least one surviving parent who indicated that their parents’ mortgage balance was less than half what the house was worth; seniors who owe less than 50 percent of their home’s equity but do not hold reverse mortgages; and owners who have had reverse mortgage for at least two years.
Presented with a 10-point scale, with 10 representing the maximum level of satisfaction, 43 percent of the respondents gave their mortgages the highest rating possible, a 10. Thirty-two percent graded their loans at between six and nine.
In addition, more than half would "definitely" recommend a reverse mortgage to another family member or friend, and 28 percent more would "probably" do so. Only 15 percent said they definitely would not recommend the loan.
The data also revealed four salient facts:
- Seniors (and their adult children) are deeply worried about the current economic situation, and the consistent sentiment is that the nation is facing "tougher times" ahead.
- An overwhelming majority of seniors think that their best financial strategy is for them to pay their bills and not worry about leaving an inheritance. Their adult children agreed.
- Seniors want to stay in their homes for the rest of their lives.
- More than 40 percent of the respondents worry that they will not have enough money in the future to lead the kind of life they would want.
An example of the last point was recently shown in Idaho. AARP reported that there was a 93 percent increase in just nine years in the number of those 50 years old and older taking out, or planning to take out, a reverse mortgage. Nearly 7 percent of this group lives in poverty, the third-highest rate in the Western region.
According to the U.S. Census, Idaho is the 39th most populated state but it is seventh for the percentage of people 50 and older who have taken out, or are planning to take out, a reverse mortgage.
It’s time to recognize that a majority of seniors are pleased with their reverse mortgages. Can you say the same about your friends with conventional, "forward" loans?