ERIC Number: ED312530
Record Type: Non-Journal
Publication Date: 1986
Reference Count: N/A
Advising Older Homeowners on Home Equity Conversion: A Guide for Attorneys.
Schimeall, Kent M.; Ernst, Trudy A.
This manual is intended to introduce attorneys to the concept of home equity conversion (HEC) so that they can knowledgeably advise elderly homeowners who may be considering this type of transaction. It is directed to attorneys representing the elderly rather than to attorneys representing lenders or investors in home equity conversion transactions. The introduction explains that all HEC plans convert an elderly person's home equity into a liquid asset and enable the homeowner to continue living in the home without regular loan repayments. It is noted that HEC liquifies all or a portion of the equity in the home; entails costs to the homeowner in the form of transaction costs, interest, or foregone appreciation; and involves some risk for both homeowners and lenders. Overall considerations in counseling are discussed and attorneys are advised to conduct a cost-benefit analysis over the expected life of the client. The three most common methods of HEC (reverse mortgage loans, sale-leasebacks, and sale of remainder interests) are described and significant issues related to each method are raised. One section focuses specifically on how the various forms of home equity conversion would affect a Supplemental Security Income recipient. The final section recommends that, before making a decision about home equity conversion, elderly homeowners should consider all alternatives available to them. Some of these alternatives are briefly discussed. (NB)
American Association of Retired Persons, 1909 K Street, N.W., Washington, DC 20049 (free).
Publication Type: Guides - Non-Classroom; Information Analyses
Education Level: N/A
Authoring Institution: American Association of Retired Persons, Washington, DC.