By Peter Bell

As the President of the National Reverse Mortgage Lenders Association (NRMLA), I have been on the frontlines of the reverse mortgage industry for many years and have witnessed firsthand the many changes it has gone through. I am proud to represent an industry that is replete with responsible and ethical lenders—lenders who are trying to help seniors cope with tough economic times. Through research we recently conducted, we know that seniors have significant trepidation about the nation’s economic landscape, and its impact on their own financial picture. The reverse mortgage industry is poised to help seniors navigate through these challenging times by offering a product that can ease their financial worries.

However, despite reforms that have revolutionized and improved the industry, reverse mortgages continue to get short shrift in the media. Because reverse mortgages are an unknown to many, it is an issue that continues to be misunderstood. My hope is that this monthly column will begin to shed much-needed light on this important financial product—a product that can truly make a difference in a senior’s life.

The obvious first question is: What is a reverse mortgage?

A reverse mortgage enables homeowners who are 62 years of age and older to convert part of the equity in their homes into tax-free cash without having to sell the home, give up title, or take on a new monthly mortgage payment. The reverse mortgage is aptly named because the payment stream is “reversed.” Instead of making monthly payments to a lender, as with a regular mortgage, a lender makes payments to you.

The amount of funds you are eligible to receive depends on your age (or the age of the youngest spouse in the case of couples), the appraised home value, interest rates, and in the case of the government program, the FHA lending limit. In general, the older you are and the more valuable your home, the more money you can get.

You can choose to receive the money from a reverse mortgage all at once as a lump sum, fixed monthly payments either for a set term or for as long as you live in the home, as a line of credit, or a combination of these. The most popular option is the line of credit, which allows you to draw on the loan proceeds at any time.

The proceeds from a reverse mortgage can be used for anything, whether it’s to supplement retirement income to cover daily living expenses, repair or modify your home, pay for health care, pay off existing debts, cover property taxes, and prevent foreclosure.

That is essentially the nuts and bolts of a reverse mortgage. There is more information to share about the product, as well as your rights and responsibilities as a borrower—and I will certainly go into those details in future columns.

However, you may also want to know who NRMLA is and what we stand for.

NRMLA is the national voice and, in many ways, the conscience of the reverse mortgage industry. We view our responsibility as presenting America’s senior population with the best possible financial product and providing them assurance that they can borrow with confidence from a NRMLA member.

To fulfill this significant responsibility, NRMLA works closely with our 300 member companies and over 1000 individual members as well as with Congress, the Department of Housing and Urban Development, bank regulatory agencies, and state legislatures to review and refine the reverse mortgage delivery process. In all of these situations, the bottom line must be, and is, how all of our actions and decisions affect the clients we are here to serve.

At the same time, within our membership, NRMLA vehemently advocates commitment to the highest ethical standards and the placement of the clients’ needs above any personal gain, recognition or achievement. In fact, NRMLA membership requires adhering to a Code of Ethics and Professional Responsibility that commits all members, whatever their role in the process, to performing their jobs with integrity and empathy.

As the advocates for the reverse mortgage industry, NRMLA works with federal and local government officials on legislation and regulation to continually review the financial product and the methods by which it is marketed and presented.

We truly consider the opportunity to serve America’s seniors and provide them with security a rare privilege. That might sound like hokum, but it’s why I got into this industry—and why I am so passionate about the product.

Through this column, you will hopefully learn more about what a reverse mortgage truly is. I’ll provide you with accurate and timely news that will help you make an informed decision about the product. At the end of the day, you might decide that a reverse mortgage is not for you. And that’s ok. But I want to make sure that decision is based on sound information—and not the scary headline of the day. As you look toward funding your longevity, let’s make sure you look to your home as being part of that equation—because a reverse mortgage might just be the solution you’ve been looking for.

Peter Bell is the president of the National Reverse Mortgage Lenders Association.