Why I Believe In Reverse Mortgages

There was a 62-year-old husband and his 61-year-old wife living in Kelowna, BC.  One day the husband had a massive heart attack and died instantly.  Insurance paid off all the debts.  The husband had always looked after the financial affairs.  The widow knew nothing about financial matters and couldn’t even balance a cheque book.

The Beginning…

She started receiving credit offers in the mail and responded to them.  A son, living elsewhere, visited his mother one day and found out that she had accumulated new debt in the amount of $40,000.  The widow could not keep up with all the payments with the reduced pension income so the son took her to her local financial institution that the couple had dealt with for many years.

They met with the branch manager and arranged a term mortgage to pay off the debts and give the mother a $5,000 limit credit card.  The son again visited the mother one winter day two years later and found that her gas had been turned off due to nonpayment.  She was using a space heater to keep warm.  He couldn’t understand why there was a problem.

He did some investigating and discovered that the branch manager had given his mother a secured line of credit with a limit of $90,000 and a $15,000 credit card.  The widow had maxed out the line of credit and the credit card.  Because of a poor market and deferred maintenance of the property, the home could not be sold even after it was listed for six months.

The End

The son arranged for his mother to live with her daughter in Alberta.  He cleaned out the home and took the keys and gave them to the branch manager telling her that he didn’t know what else to do.  Maybe the widow would have been best served if she had been presented with either the option of a term mortgage or a reverse mortgage; and then the widow might have been able to stay in her home for the rest of her life.  Unfortunately, she wasn’t presented with the option.

Why is this story important?  Because the widow was my mother.

Bob Urbanovich

BDM for HomEquity Bank

Mich Sneddon, CPA, CA

A Canadian Chartered Accountant and licensed Mortgage Professional – creator of Reverse Mortgage Pros – the #1 reverse mortgage specialists in Canada.  I make it my mission to educate Canadians about how reverse mortgages work so that you can make an informed and educated decision that’s right for you and your family.