Understanding Reverse Mortgages: A Financial Tool for Divorce Professionals and Gray Divorces

Understanding Reverse Mortgages: A Financial Tool for Divorce Professionals and Gray Divorces | Laura Phillips

http://www.MediatorPodcast.com

Hi, welcome to MediatorPodcast.com, a podcast and video series about all things related to mediation, negotiation, and settlement offers.

My name is Melissa Gragg, and I'm a financial mediator and corporate valuation expert based in St. Louis, Missouri. I’ve authored several books, including Anchor the Deal, which focuses on divorce mediation and negotiating settlement offers.

But my guest today is a renowned expert in her field. Please welcome Laura Phillips to the podcast. She's a reverse mortgage specialist based in Colorado and also services clients in Florida, California, and Arizona. With over 25 years of experience in real estate lending, she brings an option to the mediation table that many professionals may not be aware of—and therefore may not be utilizing.

This is an especially relevant tool when working with couples going through gray divorce, or for financial advisors focused on preserving retirement assets. There’s a lot to unpack here today.

Welcome, Laura! 

5 Key Takeaways:

• Modern Reverse Mortgages Are Safer and More Flexible
• Ideal for Seniors in Gray Divorce Situations
• Misconceptions Are Common but Often Incorrect
• A Strategic Tool for Advisors, Mediators, and Investors
• Funds Can Be Used for Anything—with No Monthly Payments

Questions you may ask before watching this episode:
1. What is a reverse mortgage and how does it work?
A reverse mortgage is a loan available to homeowners aged 62 and older that allows them to convert home equity into cash without selling their home or making monthly mortgage payments. The loan is repaid when the homeowner moves out, sells the home, or passes away.

2. Who is a good candidate for a reverse mortgage?
Seniors aged 62+ who want to stay in their home long-term and need to supplement retirement income, pay for care, or avoid tapping into retirement accounts. It's also useful for those receiving a house in a divorce and needing access to equity.

3. Can you use a reverse mortgage in a divorce settlement?
Yes. Reverse mortgages are increasingly used in gray divorces to help one party retain the home while paying the other their share of the equity, without needing to sell the property or liquidate investments.

4. Do you lose ownership of your home with a reverse mortgage?
No. You retain full ownership and remain on the title. The reverse mortgage is simply a lien on the home—just like a traditional mortgage.

5. What happens to the home when the borrower dies or moves out?
Heirs can choose to repay the loan and keep the home or sell the property. If the home sells for less than the loan balance, heirs owe nothing more—because reverse mortgages are non-recourse loans.

6. Are reverse mortgage proceeds taxable?
Generally, no. Reverse mortgage proceeds are considered loan advances and not income, so they are usually not subject to federal income tax. However, borrowers should consult a tax advisor for personal situations.

7. Can reverse mortgage funds be used to invest or buy another property?
Yes. While the reverse mortgage must be on your primary residence, funds can be used however you wish—including buying investment property, making home modifications, or starting a business.

Connect with Laura:
https://www.linkedin.com/in/laurawphillips/
https://myhomeloandenver.com/

Connect with Melissa:
Melissa Gragg  
Expert testimony for financial and valuation issues  
Bridge Valuation Partners, LLC  
melissa@bridgevaluation.com  
http://www.BridgeValuation.com  
Cell: (314) 541-8163