Many years ago, an elderly neighbor who lived in the small community where we have our cottage was worried about money. She was in her 80's and in poor health. A rather angry and hostile middle aged son lived with her. He had gone back to live with his parents after a divorce when he was in his 30's. He worked rarely. He was frankly scary.
I told this elderly neighbor how well a reverse mortgage had worked out for my mother. Unbeknownst to me this neighbor then took out a reverse mortgage before she died. I heard about her death when we went down to our cottage in the spring that year. When I saw her son and told him how sorry I was his mother died, he said, well, you're the only one who feels that way. I was shocked. Seeing my expression he sneered, you didn't have to live with them
As I recall now, this discussion with my neighbor was at the peak of housing prices in the mid 2000's. My neighbor took out a reverse mortgage on her home but didn't spend the money. She put it in the bank in case she needed it. Her two children then equally inherited the money when she died.
The no good son was furious. He assumed he would keep the home indefinitely since his sister was married and lived in Texas and in kindness to him wouldn't push for a sale. He wanted everything.
Instead, by law, both siblings would split the money in the bank. That money was almost twice what the cottage would sell for later on at the bottom of the housing market.
The son stayed in the cottage for months after the bank owned it and had to be almost forced out. He was so angry I avoided contact with him. I was afraid he would know what I told his mother about reverse mortgages.
Tuesday, June 18, 2019
Wednesday, June 12, 2019
Reverse mortgages
These financial vehicles known as "reverse mortgages" began as a way for seniors to stay in their homes on a limited income. The idea is that after your mortgage is paid off all your income is in your home and you can't touch it for daily living expenses. You are "house poor". So the mortgage is "reverse" and you get paid for the equity in your home. The catch is, the bank takes first what you borrowed when you sell, die or otherwise leave your homed
Over the years there have been criticisms of reverse mortgages because of high fees and, then even worse, what does a senior do when the reverse mortgage money runs out and they can't keep up the property, etc. Well, the bank can, and does, foreclose.
As is the case with many other decisions....financial and otherwise, the devil is in the details.
In the years before the Great Recession, my mother, in the early stages of dementia, was living in the only home she had ever known - the home she and my father built the year before they were married. The home wasn't meant as an investment but it turned out to be exactly that 60 years later.
Mom wanted to stay in her own home and not go to a "facility". She had limited savings and a small pension plus social security. She needed help. She was climbing up stairs to her bedroom. Once she fell going down. She avoided injury by going "bump, bump, bump", on her buttocks. She explained this to our daughter who visited and noticed painful bruises all over her back to her knees.
We slowly hired "helpers" for Mom, older Irish women who were probably in the country illegally. We had several of them, part of an Irish-American, Catholic cohort who lived not far from us. Mom was comfortable with them since she was third generation Irish-American and loved "the Irish".
Then the small amount of Mom's savings ran out. Reverse mortgages were becoming increasingly common and home prices were going up. We took out a reverse mortgage for Mom's care, then again as the value of her home went up. Then again a third and final time. Then we had to sell Mom's home and move her into an apartment. This was February 2007. One sister suggested we try to sell Mom's home privately since homes were selling so fast. Then it happened before we barely blinked an eye. The housing recession happened first. There were some lookers but no buyers. Real estate wasn't selling. We gave the listing to a realtor. After several price reductions, Mom's home was sold in October 2007 . We took the cash and used it to fund Mom in an apartment. When Mom was 95 her money ran out. We applied for NY state Medicaid which was approved but we had to take minimum wage NY state approved care givers. No more lovely Irish women. One of the new care givers dropped Mom in the shower. Mom broke her leg and, amazingly, recovered, using a walker but still mobil. Mom died at age 97 with my sister by her side. She felt safe and secure with my sister holding her hand.
Over the years there have been criticisms of reverse mortgages because of high fees and, then even worse, what does a senior do when the reverse mortgage money runs out and they can't keep up the property, etc. Well, the bank can, and does, foreclose.
As is the case with many other decisions....financial and otherwise, the devil is in the details.
In the years before the Great Recession, my mother, in the early stages of dementia, was living in the only home she had ever known - the home she and my father built the year before they were married. The home wasn't meant as an investment but it turned out to be exactly that 60 years later.
Mom wanted to stay in her own home and not go to a "facility". She had limited savings and a small pension plus social security. She needed help. She was climbing up stairs to her bedroom. Once she fell going down. She avoided injury by going "bump, bump, bump", on her buttocks. She explained this to our daughter who visited and noticed painful bruises all over her back to her knees.
We slowly hired "helpers" for Mom, older Irish women who were probably in the country illegally. We had several of them, part of an Irish-American, Catholic cohort who lived not far from us. Mom was comfortable with them since she was third generation Irish-American and loved "the Irish".
Then the small amount of Mom's savings ran out. Reverse mortgages were becoming increasingly common and home prices were going up. We took out a reverse mortgage for Mom's care, then again as the value of her home went up. Then again a third and final time. Then we had to sell Mom's home and move her into an apartment. This was February 2007. One sister suggested we try to sell Mom's home privately since homes were selling so fast. Then it happened before we barely blinked an eye. The housing recession happened first. There were some lookers but no buyers. Real estate wasn't selling. We gave the listing to a realtor. After several price reductions, Mom's home was sold in October 2007 . We took the cash and used it to fund Mom in an apartment. When Mom was 95 her money ran out. We applied for NY state Medicaid which was approved but we had to take minimum wage NY state approved care givers. No more lovely Irish women. One of the new care givers dropped Mom in the shower. Mom broke her leg and, amazingly, recovered, using a walker but still mobil. Mom died at age 97 with my sister by her side. She felt safe and secure with my sister holding her hand.
Financial planner, redoux
Well, I keep learning. Two years ago we hired a fee only financial "advisor". Fee only is supposed to be good since they are not tempted to make a commission on 'unsuitable' investments for your age, incomes, risk tolerance, etc.
He was an older man and he was charming and thoughtful. No, said, he, he did not like annuities because of the high fees, etc. His stock picking was better than index funds because (something about...well, I forget what).
Our daughter pushed hiring this man since she had been helping us with our investments and was not comfortable managing our money going forward. He seemed better than others we had read about on line.
That was then. We knew he was selling his business to two younger guys he was really impressed with after vetting untold offers. He would remain on as some kind of ex officia advisor for sometime. Meanwhile he would spend more time in his multi million dollar Florida home.
We hired him. The stock picks were all blue chip, household names, spinning off dividends. The dividends paid for the advisor fees. The stock choices stayed steady as blue chips do. In two years, there were no more purchases, sales, trades etc. The account stayed moribund, except for the advisor fees and dividends that paid for them. The balance stayed the same. Worse, there was cash in the account JUST SITTING THERE, ignored. Then there was a half hearted purchase by the new owners of a few shares on Nike.
I couldn't stand it any more. Plus advisor fees are no longer deductible on federal income tax. My prediction...A lot of "advisors" are going to be looking for another job or trying to justify their high fees and personalized "service".
I wanted out. Oddly, I had a hard timed severing the relationship. Maybe it felt like going backward. Maybe it was the feeling we were going back to the no man's land of index funds. Coward that I am, I called the advisor's offices over the weekend and left messages in each VM. We wanted to sever the relation ship. No reason given.
Then I got a phone call from one of the offices , asking me to fill out a form. Whew. No questions asked. I didn't need to justify this decision and get a smooth rebuttal. They sent me a check for the unspent advisor fees. I then transferred the advisor's stocks to another account in the same financial platform. And there the stock picks of our former advisor sit. At least we no longer pay fees.
Live and learn as they say.
He was an older man and he was charming and thoughtful. No, said, he, he did not like annuities because of the high fees, etc. His stock picking was better than index funds because (something about...well, I forget what).
Our daughter pushed hiring this man since she had been helping us with our investments and was not comfortable managing our money going forward. He seemed better than others we had read about on line.
That was then. We knew he was selling his business to two younger guys he was really impressed with after vetting untold offers. He would remain on as some kind of ex officia advisor for sometime. Meanwhile he would spend more time in his multi million dollar Florida home.
We hired him. The stock picks were all blue chip, household names, spinning off dividends. The dividends paid for the advisor fees. The stock choices stayed steady as blue chips do. In two years, there were no more purchases, sales, trades etc. The account stayed moribund, except for the advisor fees and dividends that paid for them. The balance stayed the same. Worse, there was cash in the account JUST SITTING THERE, ignored. Then there was a half hearted purchase by the new owners of a few shares on Nike.
I couldn't stand it any more. Plus advisor fees are no longer deductible on federal income tax. My prediction...A lot of "advisors" are going to be looking for another job or trying to justify their high fees and personalized "service".
I wanted out. Oddly, I had a hard timed severing the relationship. Maybe it felt like going backward. Maybe it was the feeling we were going back to the no man's land of index funds. Coward that I am, I called the advisor's offices over the weekend and left messages in each VM. We wanted to sever the relation ship. No reason given.
Then I got a phone call from one of the offices , asking me to fill out a form. Whew. No questions asked. I didn't need to justify this decision and get a smooth rebuttal. They sent me a check for the unspent advisor fees. I then transferred the advisor's stocks to another account in the same financial platform. And there the stock picks of our former advisor sit. At least we no longer pay fees.
Live and learn as they say.
Tuesday, June 4, 2019
My friends are widows
It happens slowly and then it is an onslaught....your friends' husbands are ill, seriously ill, or dying.
I started this morning with a telephone call to my sister in law a state away. Her husband has dementia (as does his only sibling). He also has lymphoma, in remission but not cured. Recently he was hospitalized for pneumonia and then shifted to a rehab facility. He is home now but she knows what is ahead of her. Fortunately, they are in a condo in a retirement community and live near three of their 4 children. She is well situated (if that's the word) for the years ahead.
Then I took Zoey on a walk through the woods to the water and called a friend whose husband is totally immobilized with ms, She was in bed with vertigo. Then I called another friend whose wife has dementia. She fell picking something off the floor and has two black eyes. They are going to his alma mater this weekend (he hopes) for an award ceremony, honoring him. She has packed three times, always asking, is today the day. Then he lost his glasses. He looked all over for an hour and couldn't find them. Then she said, here try mine, and handed him her glasses. They were his..
On the way out of the woods I saw a neighbor I know slightly. She said I think of you everyday, do you want that book on New Zealand you gave me years ago? I said keep it! Maybe you can take a cruise there. No, she said, too far. Her husband had botched back surgery this past winter and now has no sensation in his leg.
I was getting late for a vet appt and not yet home but had to stop and ask my next door neighbor how his 95 year old mother was. It's been hard lately. She was transferred from assisted living (which she hated) to a rehab facility (which she also hates). They are meeting with hospice in a few days. He looks awful, said, she is so unhappy and miserable. I said you have done so much for her (stayed with her in rehab in shifts with his wife). Well, she did so much for us for all these years, said he. It's pay back time. He looked like he was going to cry and turned away.
I went into the house and asked Alexa to put on fast 50's music and danced the stress away to Bill haley and the Comets.
I started this morning with a telephone call to my sister in law a state away. Her husband has dementia (as does his only sibling). He also has lymphoma, in remission but not cured. Recently he was hospitalized for pneumonia and then shifted to a rehab facility. He is home now but she knows what is ahead of her. Fortunately, they are in a condo in a retirement community and live near three of their 4 children. She is well situated (if that's the word) for the years ahead.
Then I took Zoey on a walk through the woods to the water and called a friend whose husband is totally immobilized with ms, She was in bed with vertigo. Then I called another friend whose wife has dementia. She fell picking something off the floor and has two black eyes. They are going to his alma mater this weekend (he hopes) for an award ceremony, honoring him. She has packed three times, always asking, is today the day. Then he lost his glasses. He looked all over for an hour and couldn't find them. Then she said, here try mine, and handed him her glasses. They were his..
On the way out of the woods I saw a neighbor I know slightly. She said I think of you everyday, do you want that book on New Zealand you gave me years ago? I said keep it! Maybe you can take a cruise there. No, she said, too far. Her husband had botched back surgery this past winter and now has no sensation in his leg.
I was getting late for a vet appt and not yet home but had to stop and ask my next door neighbor how his 95 year old mother was. It's been hard lately. She was transferred from assisted living (which she hated) to a rehab facility (which she also hates). They are meeting with hospice in a few days. He looks awful, said, she is so unhappy and miserable. I said you have done so much for her (stayed with her in rehab in shifts with his wife). Well, she did so much for us for all these years, said he. It's pay back time. He looked like he was going to cry and turned away.
I went into the house and asked Alexa to put on fast 50's music and danced the stress away to Bill haley and the Comets.
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