I recently worked with a woman who was receiving Medicaid. She had originally talked with a national lender who only did phone applications and when she asked how the reverse mortgage would impact her Medicaid, was told, “Don’t tell them you’re doing a reverse mortgage.” When I further questioned her about the program they offered, she said the other loan officer had told her to do the fixed rate.

As you point out the fixed rate would pay the originator more. The other issue, as you point out, the fixed rate means the borrower has to pull all fund out in a lump sum. In this borrower’s case she did not need all the funds up front and pulling them out in the lump sum would have caused her to lose her Medicaid benefits.

She fortunately did her loan with me. She did the adjustable rate and structured the loan so it would not affect her Medicaid benefits. Additionally I provided her a copy of the MN Statute explaining how Medicaid can still be received with a reverse mortgage. I also worked with her attorney so he would understand all the details and implications of the reverse mortgage and her Medicaid.

Additionally, there is a county tax in MN that has a special calculation. In some counties they don’t know/understand how to calculate this amount which was her situation. Because I am familiar with the law and the proper calculation I was able to refer the county to the state contact to verify the lower amount of the tax.

If she would have gone with the other lender she not only would have lost her Medicaid benefits as well as had to pay a higher amount for the county tax.

I too have issues with the lenders who do not look out for the borrower’s best interests but care more about their own commissions. It’s not professional to bad mouth your competition but it’s also hard to know that the competition is taking advantage of our seniors. I’m not sure what to do about it other than to keep sharing our stories and educating on what to consider when talking with reverse mortgage lenders.

Keep up the good articles!