For the right candidates, a reverse mortgage can offer relief from financial stress and a newfound freedom that most baby boomers haven't felt since, well, the 1960s. George May and his wife fall into that category. May got a reverse mortgage from Security Reverse and said the fit for him and his wife was perfect.

"I'm 70 and retired and my wife is 65. We downsized to a new home, and we're planning a Winnebago trip. We also bought a new car, and best of all, we don't have any house payment hanging over us," May told Credit Union Times. "We wanted to be able to go away without worries and come home when we like. All we pay is insurance and taxes on our property."

May took the cash out option and said his daughter's inheritance is still there. "We had $150,000 in equity in our house, but they go on a full appraisal, which was about $300,000. So now, we see our money actually grow each month. The kids have no worries about their parents, and we have the freedom of not being tied down."

There are several ways to access the money, according to the National Reverse Mortgage Lenders Association, including an upfront lump sum payment, a line of credit, fixed monthly payments for as long as the borrower remains in the home (or a predetermined, shorter period) or a combination of monthly income and line of credit.

NRMLA offers a series of information booklets about reverse mortgages on its Web site (www.nrmla.org), including a FAQ that rebuts the usual misconceptions and fears associated with reverse mortgages. Chief among them is that only "desperate seniors" are the usual takers, that a house must be debt free to qualify and that the lender owns the house after the transaction concluded. None of that is true.

The amount received can vary according to the equity in the home, and the borrower retains the title throughout the life of the mortgage. If a borrower dies, the equity goes to the estate. Inheritors can buy back the home if they repay the loan.

Already homeowners, most takers already understand the usual closing costs and fees, but because a reverse mortgage requires financial counseling with an independent adviser before being granted, all other details are covered. That counseling requirement and the longer timeframe associated with doing financial transactions with seniors can make it a very labor-intensive product, said Tane Cabe, president of Security Reverse. "That has nothing to do with their age in any way," he explained. "It's because seniors tend to be very conservative. They don't like to be rushed, and after all, this is about what is likely to be their biggest asset: their home."

Cabe said he stumbled into the credit union movement by meeting a director for a local credit union. They got to talking, and Cabe said he realized credit unions take the same approach his business takes. "Credit unions, I found out, are all about doing right by their members, and that's the way I do things too. We have a client coordinator who visits with each client and that can take upwards of an hour or more. And we stay in touch, visiting and calling throughout the process. And when it's all done, we stay in touch."

May said that talking with his coordinator was "like talking to my own son. He had my best interests at heart, and we knew exactly what to expect. There were no surprises." May said he was a member of Tapco CU in Tacoma and was so pleased that he sent all his reverse materials to the mortgage lending officer there, Steve Furman. "My sister-in-law got one, too and while it's not a one-size-fits-all product, there are a lot more people out there who would benefit from this."

"Offering reverse mortgages can enhance the relationship between credit unions and members with the added benefit of bringing their kids and possibly grandchildren into the picture. If a second and third generation sees how the credit union is doing right by their parents and grandparents, doesn't that cement the value of that membership?" asked Cabe.

Beyond that goodwill, Cabe said that if a credit union has 10,000 members it could expect to have 2,500 age-qualified members. Out of those 2,500, some 150 members would close a reverse mortgage each year. The average fee income to the credit union is $1,250. The aggregate noninterest income to the credit union would be $187,500. "Our credit union program is really gaining momentum. We expect to close 375 credit union reverse mortgages this year. Year-to-date we have closed 13 reverse mortgages. In 2009 we expect the number to be over 1,000. The estimates are based on current and expected relationships. We have several proposals to major credit unions which should prove to generate our expected 2008 and 2009 closings."

Reverse Mortgage Advisors is a father and son mortgage brokerage that stresses ethical operations. Through a friendship with CU consultant Pete Snyder, they found they also worked in financial services and shared a common interest in doing business a certain way. "We met many years ago so I know them a long time. Michael Borba and his son Josh are the kind of brokers who, when things are bad, are still doing business. We were talking one day about trends and they asked about doing business with credit unions, so we decided to work together to create a delivery model for reverse mortgages that is suitable for CUs."

Snyder said that CUs are on the learning curve for reverse mortgages but that it's changing fast. And they need to play a fast game of catch-up because megabanks like Bank of America and IndyMac are already gaining market share with a huge marketing push.

"It's important for everyone to know that the reverse mortgage of years ago bears little resemblance to today's product," said Michael Borba. "It used to be fairly expensive, inflexible and irrevocable as to structure. Now, it's been revamped and meets the needs of people who are living longer, who may not have saved enough to accommodate that longer lifespan and are fearful of eroding cash and other assets."

"Many of those old perceptions still exist and often, when I talk to CEOs about it, they say something like, 'well, people have a bad view of reverse mortgages,' but once they learn that its a federally insured HUD product that can provide a real meaningful benefit to members as well as provide noninterest income to the credit union, they're all ears. I know that CU net income is down and there's a real need to fuel the loan and deposit engine. Well, a reverse mortgage can do that. And, it doesn't affect the loan side because there is no mortgage. Many members may already have CDs that are not enough for retirement, especially given the higher costs of gas and even food today, and I haven't even mentioned the high cost of health care. So there's likely to be no deposit drain when those CDs mature."

Michael Borba said that 95% of all reverse mortgages are home equity conversion mortgages because they provide security for the borrower. The Department of Housing and Urban Development regulates reverse mortgages and requires that all lenders be approved and licensed.

Josh Borba said that what many perceive as an obstacle, the counseling requirement, would be viewed as a real plus by credit unions. "People seeking reverse mortgages value the time taken to explain things and personal investment needed to work things out, and credit unions strive to make that bond of trust stronger."

The Borbas want to create an adviser relationship with individual CUs in which front line staffers identify and refer prospective borrowers. "All they'd have to do is call us and we'll handle everything from there. We provide marketing materials and have information to place on Web sites and newsletters and so on. Everything will have the CU's name but the actual loan documents will have our name." Snyder said, "There's a good referral model in the credit union world, and members are already aware of the referral to another trusted entity from the investment side."

Why shouldn't CUs consider doing reverse mortgages in house? "While many certainly could, the investment required for licensing and training staff may not justify it," said Snyder. "But credit unions need to offer reverse mortgages as a viable service to members."

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