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Mount Vernon Mortgage welcomes senior loan officer Michael Kelly

Dec 07, 2008

Forward on reverse: Obama's call and reverse mortgagesAtare E. Agbamu, CRMScommunity service, volunteers, HECM, Obama's "army of new teachers" Reverse mortgages can boost volunteerism among aging baby boomers and support President-Elect Barack Obama's call to community service. That was one of the lessons I took away from my conversation with Paul and Irene Alexander of Hampstead, N.H. when I was researching my recently released book, Think Reverse! The Paul and Irene are pre-boomers and lifelong volunteers. Paul is a retired human resource manager, and Irene retired as a receptionist for a law firm. They believe the reverse mortgage they took six years ago gave them the freedom to focus on helping others in their community. "From a contribution basis, we were able to concentrate on contributing to other people's quality of life, as well as our own," Paul Alexander said. Until Paul took ill three years ago, the Alexanders gave 24 hours a week (or 1,248 hours annually) doing volunteer work. Nationally, approximately 61 million people volunteered in their communities and gave 8.1 billion hours of service, valued at $158 billion in 2007, according to the Corporation for National and Community Service. Volunteering in America reported that 31.2 percent of boomers gave 52 hours a year to their communities between 2005 and 2007. At 78 million, baby boomers could double the number of older adult volunteers in the coming decades. They will help address needs in education and other areas. In education, for example, we will need more than two million new teachers in the next decade, especially in math, science and special education. The teacher shortage is acute in urban and rural school districts. So, several battalions of President-Elect Obama's "army of new teachers" will have to come from highly-educated, retired baby boomers. As Paul Alexander, 74, knows very well, reverse mortgages can give boomers the freedom to heed Barack Obama's call to serve their communities. "If we had to work to pay our mortgage, that's a different story. We wouldn't be able to make those contributions. It is a great social plus. [A reverse mortgage] is truly one of the best things that has happened to this country in a long time," Paul said. Unlike the Alexanders, many baby boomers may have to work because more than half of them have a mortgage payment obligation. According to a MetLife Mature Market Institute demographic profile, 56 percent of younger boomers carry a mortgage. Among older boomers, it is 53 percent. These boomers will enter retirement with some monthly mortgage payment burden. While some may find meaningful work that also supplies the cash they need, others may have to settle for work that may not fully use their skills and education or give them the flexibility they need in post-retirement work. That is where a reverse mortgage solution comes in. How can reverse mortgages aid volunteerism? There are at least two ways. First, depending on mortgage balance and equity availability, a reverse mortgage stops the monthly negative cash-bleeding. And second, it increases positive cash in-flow, giving the boomer budgetary flexibility to mix leisure with community service and enhance life satisfaction. The physical and psychological health benefits of volunteerism are well-documented. With a massive and permanent aging population under way, the public health value of volunteerism cannot be underestimated. Therefore, policymakers should look at how reverse mortgages can be used to advance volunteerism among baby boomers. One way is for an Obama administration to waive Home Equity Conversion Mortgage reverse mortgage two-percent upfront mortgage insurance premium for eligible older adults who have given at least 500 hours of documented community service two years before applying for a reverse mortgage. During the presidential campaign, Obama promised a $4,000 college tuition credit for students who commit to service as teachers in high-need communities. Similar incentives should be considered via reverse mortgages for the legions of older adults who forgo retirement leisure to serve their communities in response to Obamas call. Think reverse. Move forward! Author's note: The book, Think Reverse!, is now available at Atare Agbamu is the author of Think Reverse! (The Mortgage Press, 2008) and more than 100 articles on reverse mortgages. He is a reverse mortgage specialist in Minnesota and an adviser to older adults, their families, professionals and institutions across the country. He may be reached by phone at (612) 203-9434 or e-mail [email protected]. To offer comments on his book, visit and click on the "Bookfeedback" page.
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