CNBC: Reverse Mortgages Aren’t for the “Stupid”
April 26, 2017
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Aging in Place with a Reverse Mortgage: Challenges and Opportunities

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As a generation of aging Americans collectively decides that they’d rather stay at home than move into senior housing, reverse mortgage originators and lenders could have a new potential marketing angle. But as with many other retirement-planning ptiches, the words could fall on deaf ears.

On a recent National Reverse Mortgage Lenders Association webinar about aging in place with a reverse mortgage, Louis Tenenbaum — founder of HomesRenewed, an advocacy group dedicated to making America’s homes accessible to the elderly — said he’s been preaching the need for aging-related home improvements for decades without seeing significant shifts in behaviors.

“People hear the message, but they don’t want to hear about it,” Tenenbaum said, despite persistent surveys that show the vast majority of Americans want to remain in their homes even as their physical abilities decline.

“People want to maintain that autonomy,” Tenenbaum said.

He cited data from Clarity Insights, a marketing research firm, showing that seniors overwhelmingly feared things like a loss of independence (26% of respondents), ending up in a nursing home (13%), and the loss of access to family and friends (11%) more than death itself, with just 3% of people citing the end of the line as their top concern.

Tenenbaum was joined on the call, part of NRMLA’s Reverse Mortgage Education Week, by Todd Brickhouse, president of the Brickhouse Design Group home renovation firm in Massapequa Park, N.Y., and Craig Barnes, Reverse Mortgage Funding’s corporate education leader. Brickhouse dedicated his portion of the proceedings to the range of accessible renovations that homeowners can consider, from ramps to in-home elevators to standing bathtubs, while Barnes provided the audience with a basic breakdown of the Home Equity Conversion Mortgage program.

Barnes also told the story of a client who said she wanted to be taken out of her house horizontally and not vertically, reflecting the prevailing attitudes of many aging citizens.

“And that really is very much the borrower who is a great fit for reverse mortgages,” Barnes said.

That’s because the kinds of upgrades that allow seniors to stay at home don’t come cheap. Brickhouse and Tenenbaum both laughed when asked to give a ballpark cost for a typical couple in an average-sized home, saying that it’s impossible to give a blanket estimate. But Brickhouse said retrofitting just a bathroom could cost anywhere from $17,000 to $25,000 in his home area of metropolitan New York, with residents in smaller communities outside of cities looking at a bill that’s about $5,000 less.

The high price tag could be a reason why more Americans don’t consider it as an option. According to new data from the National Association of Home Builders’ remodeling arm, only 17% of remodelers reported that “most” of their customers were aware of aging-in-place improvements, a slight increase from 11 percent back in 2013. The NAHB also reported declines in the proportions of remodelers who have conducted certain higher-price-tag jobs, such as the addition of a first-floor bedroom, the installation of ramps, and lowering door thresholds.

The problem, according to Tenenbaum, is that most American homes were designed at a time when people didn’t think about living into their 80s and 90s, let alone staying at one property for that length of time. But he noted that millions of Americans live in houses that were built to meet the needs of bygone generations, including homes constructed before electrification, gas-powered furnaces, or high-speed internet. Renovating homes to adapt to the needs of a greying nation, therefore, should be seen as the logical next step in the evolution of the American home.

“It’s not about aging and frailty,” Tenenbaum said. “It’s about a continuing pattern of ingenuity.”

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