Attorneys who deal with real estate, elder law, estate planning, family law and divorce or financial matters should be well-informed about reverse mortgages to provide comprehensive guidance to their clients. Here are some key aspects that attorneys should know about reverse mortgages:

1. Legal Requirements and Regulations:
   Attorneys should have a solid understanding of the legal requirements and regulations surrounding reverse mortgages. HECM reverse mortgages are regulated by the Federal Housing Administration (FHA) and have specific guidelines that must be followed to ensure compliance. Attorneys need to stay updated on any changes to these regulations. With the emergence of the various proprietary reverse mortgage loans available, it is strongly recommended to have a reverse mortgage expert in your sphere to consult with.
2. Eligibility Criteria:
   Attorneys should know the eligibility criteria for obtaining a reverse mortgage. This includes age requirements (borrowers must be at least 62 years old for a HECM reverse mortgage), homeownership status, and the primary residence requirement. They should be able to assess whether their clients meet these criteria and offer guidance on contacting a local reverse mortgage expert with access to every loan option available.
3. Client’s Financial Situation and Retirement Plan:
   Attorneys should thoroughly evaluate their client’s financial situation and retirement plan before recommending a reverse mortgage. It’s important to consider the client’s income, expenses, debts, and other assets to determine if a reverse mortgage is a suitable option. If the client plans to move in the next couple years or their home does not fit their lifestyle, purchasing a new home with a reverse mortgage may be a better option to consider.
4. Benefits and Risks:
   Attorneys should educate their clients about the benefits and risks of reverse mortgages. While these loans provide access to home equity, they also have potential downsides, such as accruing interest and possibly reducing the estate’s inheritance value. Attorneys can help clients weigh the pros and cons as long as they are educated about the various reverse mortgage options available and have an expert reverse mortgage colleague just a phone call away.
5. Impact on Heirs and Estate Planning:
   Attorneys should advise clients on how a reverse mortgage can impact their heirs and estate planning. The loan balance, including accrued interest and fees, will need to be repaid when the last borrower leaves the home. Attorneys can help clients understand the implications for their heirs and devise strategies to address potential challenges. Many clients undergo this process without the help of an attorney; the servicing company may work with the executor of the estate to formulate a plan.
6. Counseling Requirement:
   Before obtaining a reverse mortgage, borrowers are required by federal law to undergo a third-party counseling phone call or meeting with a HUD-approved counselor. Attorneys should be aware of this requirement and ensure their clients receive proper counseling to make informed decisions. Every client who receives a proposal for a reverse mortgage is provided with a list of counselors they can contact directly for service. An attorney is not required for any part of the standard reverse mortgage process, but a client may feel more at ease with the approval of their trusted attorney as an advisor.
7. Loan Types and Payment Options:
   Attorneys should be familiar with the different types of reverse mortgages, including Home Equity Conversion Mortgages (HECMs) and proprietary reverse mortgages offered by private lenders. They should also understand the various payment options available to borrowers, such as lump sums, monthly payments, lines of credit, and a combination of these.
8. Loan Terms and Conditions:
   Attorneys should carefully review the terms and conditions of reverse mortgages with their clients. This includes interest rates, loan fees, and repayment requirements. Attorneys can help clients negotiate favorable terms and avoid predatory lending practices. Attorneys should make sure their clients understand they will be responsible for maintaining on-time and current property tax and homeowner insurance payments as a term of the loan.
9. Estate Planning Implications:
   Reverse mortgages can impact estate planning strategies, such as wills, trusts, and Medicaid eligibility. Attorneys should collaborate with estate planning professionals to ensure that a reverse mortgage aligns with their client’s overall financial and estate goals.
10.  Alternatives and Other Options:
    Attorneys should be prepared to discuss alternatives to reverse mortgages with their clients. They can explore other financial tools, such as home equity loans, downsizing, refinancing, and assistance programs, to help clients make well-informed decisions.
11. Uses for a Reverse Mortgage:
    Attorneys should understand that a reverse mortgage is a financial tool that can be used to meet an infinite number of objectives.
    • Divorce: If your clients are considering a divorce, a reverse mortgage may be a tool that allows them to split the asset amicably. Litigation: If they are involved in a dispute and need to fund a lawsuit, the funds from a reverse mortgage can be used for anything they want.
    • Probate: If they received a home through probate and want to split the asset, a reverse mortgage may allow them to accomplish this goal.
    • Real Estate: If your client wants to grow their real estate portfolio in retirement, the funds from a reverse mortgage could be used to purchase an investment property.

By having a comprehensive understanding of reverse mortgages and their implications and a local reverse mortgage expert in their sphere, attorneys can provide valuable guidance to their clients, ensuring that they make informed choices that align with their financial goals and legal needs. Reverse mortgages aren’t just another home loan, they are a tool that can be used to change your client’s situation.