In late 2010, the National Reverse Mortgage Lenders Association (NRMLA) participated in a series of focus groups in an effort to better understand public attitudes toward reverse mortgages. While we were encouraged by the uniformly positive feedback we received from participants – both borrowers and non-borrowers – we were intrigued by the input we got from a particular segment of our respondents: adult children (45-plus) with at least one surviving parent.

What emerged from those particular focus-group participants began to create a compelling narrative, one that pointed to the critical role that children play in their parents’ funding longevity. Through this process, we discovered that both seniors with and without reverse mortgages believe the best financial strategy for their remaining years is to pay for their own bills so that their children will not have to worry about them. As it turns out, these children agree with their parents. What came out of the focus-group sessions was an intergenerational consensus on how seniors should fund their retirement – children are much less preoccupied with receiving an inheritance and much more concerned about their parents being able to take care of themselves.

In fact, from an industry perspective, we are certainly seeing a trend in adult children getting more actively involved in helping their parents make decisions related to their retirement funding. We, most definitely, see that as a good thing.

“The children tend to be savvy in their ability to get involved and do research, which is helpful to the parents,” said Eric Rittmeyer, President of Fidelis Mortgage in Baltimore, Maryland. Rittmeyer agrees that children are becoming more active as their parents look into reverse mortgages as an option.

“A common situation is where we start off with a client calling us, and when it comes time to meet, we recommend the potential borrower bring one of their children to our face-to-face meeting,” said Rittmeyer. “There is typically some concern opening up about this to their kids because they think that the kids will be against it. But when the children sit down, we learn that they just want what is best for the parents.”

That was certainly the case with a family I came across from Mount Laurel, New Jersey.

When Ellen’s husband, Lewis, died of a massive coronary, she found herself alone with three children under fifteen living on her schoolteacher’s salary. Five years later, Ellen married Richard, a divorced man with sole custody of his four boys. Suddenly there was a family of nine, including seven teenagers, under one roof.

“All my friends said we were the Brady Bunch,” said Ellen. “And I would say, ‘No, we don’t have Alice, the cleaning lady.’” There were the obvious joys of raising a large family. And then there were the issues – such as getting them all through school. Richard, a construction project supervisor, and Ellen supported some of the kids through private school and then put six of the seven through college.

As a result, the family was not able to save for retirement. Ellen retired from teaching in 2006 at 67, and Richard subsequently retired in 2007 at 71, at which point, they downsized their home. They tried to live on her public school teacher’s pension and both of their Social Security benefits.

“They were scraping on a daily basis,” said Christene, the oldest of the seven kids. “It was hard to watch. They had both worked hard their whole lives and it was sad that they had to struggle.” Christene had recently become vice president of a bank in Rhode Island. Her bank regularly held seminars for staff on various subjects, including reverse mortgages. Christene attended one and thought this might be right for her parents.

“I went three times to make sure I thought it was the right thing,” she said. Convinced the vehicle was sound, Christene gathered her six siblings under one roof during summer vacation at the Jersey shore to discuss their parents utilizing the equity in their home now instead of passing it on to the heirs.

“I wasn’t sure how they would all respond,” she remarked. “But none of us wanted to see them struggle and we agreed unanimously.” Christene connected her parents with a lender, and the couple took out a reverse mortgage with which they paid off the $70,000 mortgage on their home, lowered their monthly expenses to a manageable place and maintain a substantial line of credit.

“It’s a great advantage to us living on a fixed income to not have to worry about bills every month anymore,” said Ellen.

“I don’t know why people say that reverse mortgages are like subprimes,” said Christene. “I worked in subprimes and I think the two loans are exactly the opposite – subprimes put borrowers in positions where they could lose their homes, but reverse mortgages are designed specifically to keep people in their homes.”