Interested in a Reverse Mortgage? 5 Tips for Finding a Reputable Reverse Mortgage Lender

When considering a financial product or loan of any sort, one of the first things to do is find a reputable company or lender to work with. This can be especially important for someone interested in taking out a reverse mortgage, a loan designated for borrowers age 62 and older. The importance of identifying a reputable reverse mortgage lender is closely related to avoiding the possibility of financial abuse, a huge and expensive problem for many older adults, according to MetLife research. MetLife’s Mature Market Institute collaborated with the National Committee for the Prevention of Elder Abuse (NCPEA) to produce a 2011 report studying elder financial abuse. The report’s key findings include an estimated annual financial loss by victims of elder financial abuse of at least $2.9 billion. That’s was up 12% from MetLife and NCPEA’s initial report released in 2009. More than half (51%) of the fraud was perpetrated by strangers, the researchers found. This again highlights the need for choosing a lender wisely. Read on for five tips for finding a reputable reverse mortgage lender. 1. Make sure they’re licensed and approved by the FHA Reverse mortgages are complex financial products. All reverse mortgage lenders must be licensed in the state or states where they do business. Most list their licensing information on their website and should be able to provide licensing information upon request. Verify that your lender is licensed before signing any documents. Lenders also need state-level licensing through the National Mortgage Licensing System (NMLS). Obtaining a state license includes a criminal background check, credit report, and education requirements for lenders. Not every reverse mortgage lender is licensed in every state, so when you’re searching for a lender, make sure they can originate a loan in your state. Additionally, in order for lenders to originate federally-insured Home Equity Conversion Mortgages (HECMs), they must be approved by the Federal Housing Administration. 2. Are they a member of NRMLA The reverse mortgage industry has a national, nonprofit trade group called the National Reverse Mortgage Lenders Association (NRMLA). Reverse mortgage lenders who belong to NRMLA agree to adhere to the group’s Code of Ethics & Professional Responsibility and reflect its Best Practices in their business dealings. The Code of Ethics includes compliance with values such as fairness, integrity, confidentiality, competence, diligence, and professionalism. 3. Utilize the Better Business Bureau’s rankings As an additional check, you could look up the lender (or their company) on the Better Business Bureau’s website. The BBB rates companies by a set of standards and best practices and allows consumers to file complaints against businesses that it helps to resolve or settle. While the BBB may not have comprehensive information on each company, it doesn’t hurt to check and find out if any complaints have been filed in the past few years and whether they’ve been resolved. 4. Get a recommendation from someone you trust Have you been working with a trusted financial advisor to plan your retirement? Reverse mortgages are increasingly being looked at as an alternative source of retirement cash flow, according to a recent article written by finance and economics experts and published in the Journal of Financial Planning. Ask if your financial planner has worked with a reverse mortgage lender before, and if he or she can recommend anyone. 5. Make sure they don’t try to pressure you into other products Be cautious of reverse mortgage lenders telling you to spend your loan proceeds on other financial products, such as annuities and other investments. Lenders are banned from “cross-selling” loans and other financial products. boldin.com prescreens reverse mortgage specialists, which includes checking originators’ licensing, business practices, and professional memberships or affiliations. Potential borrowers are only referred to reverse mortgage brokers who are approved by the FHA, adhere to NRMLA’s best practices and code of ethics, and have a clean record with the BBB. boldin.com also checks lenders’ references and ensures they are verified as reputable by at least two references.

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