Reverse Mortgages

Reverse Mortgages

If Social Security, pensions, and savings fail to provide enough retirement income, elders may also rely upon the equity in their home.
Home equity is the largest unaccessed financial resource for the elderly; and reverse mortgages allow elders to take advantage of this resource.

A reverse mortgage is a non-recourse loan that is secured by the borrower's principal residence.

Reverse mortgages are tailored to fit the needs of elderly clients.

For instance, elderly people are typically unable to afford the cost and interest associated with additional debt.

However, through the reverse mortgage, a borrower may obtain credit with very little expense and without having to satisfy an income requirement.

Although title to the residence remains in the name of the borrower, reverse mortgages attach as a first lien on the residence.

The amount of funds available pursuant to reverse mortgages are calculated using formulas analyzing the borrower's age, the proposed schedule of fund distribution, the interest rate, and the equity in the home.

The more equity the borrower has in her home, the greater the amount of funds available to her.

Funds are distributed to the borrower in one of several ways, including lump sum payments, monthly payments, or a line of credit.

The IRS does not consider the advances received to be gross income.

Significantly, complete payoff of the debt is not required until the end of the term, which occurs when the owner sells or vacates his home or, in a minority of situations, on a fixed repayment date.

Until the end of the term no payments are due.

This aspect of reverse mortgages satisfies the elderly person's wish to live in his home for his entire life.

Any interest accrued pursuant to reverse mortgages is not deductible until the end of the term.

However, because the end of the term cannot be definitively defined, the debt may often grow larger than the value of the residence.

Nevertheless, since reverse mortgages are non recourse loans, the lender is not entitled to receive the deficiency from the borrower.

However, if the value of the house at sale is more than the amount of the debt, the borrower's estate is entitled to excess proceeds.

Reverse mortgages can significantly improve the life of an elderly person.

It is beneficial due to its non-recourse nature, the diversity of disbursement alternatives, and the fact that payment is not due until the end of the term.

(For more information, see Reverse Mortgages: An Innovative Tool for Elder Law Attorneys by Carolyn H. Sawyer, 26 Stetson L. Rev. 617 (1996).)






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Kenneth Vercammen is the Managing Attorney at Kenneth Vercammen & Associates in Edison, NJ. He is a New Jersey trial attorney has devoted a substantial portion of his professional time to the preparation and trial of litigated matters. He has appears in Courts throughout New Jersey each week for litigation and contested Probate hearings.

Mr. Vercammen has published over 125 legal articles in national and New Jersey publications on elder law, probate and litigation topics. He is a highly regarded lecturer on litigation issues for the American Bar Association, NJ ICLE, New Jersey State Bar Association and Middlesex County Bar Association. His articles have been published in noted publications included New Jersey Law Journal, ABA Law Practice Management Magazine, and New Jersey Lawyer.

He is chair of the Elder Law Committee of the American Bar Association General Practice Division. He is also Editor of the ABA Estate Planning Probate Committee Newsletter and also the Criminal Law Committee newsletter. Mr. Vercammen is a recipient of the NJSBA- YLD Service to the Bar Award. And past Winner "General Practice Attorney of the Year" from the NJ State Bar Association. He is a 22 year active member of the American Bar Association. He is also a member of the ABA Real Property, Probate & Trust Section.

He established the NJlaws website www.njlaws.com which includes many articles on Elder Law. Mr. Vercammen received his B.S., cum laude, from the University of Scranton and his J.D. from Widener/Delaware Law School, where he was the Case Note Editor of the Delaware Law Forum, a member of the Law Review and the winner of the Delaware Trial Competition.

RECENT SPEAKING ENGAGEMENTS ON WILLS, ELDER LAW, AND PROBATE

Edison Adult School -Wills, Elder Law & Probate- 2007, 2006, 2005, 2004, 2003, 2002 [inc Edison TV], 2001, 2000,1999,1998,1997
Nuts & Bolts of Elder Law - NJ Institute for Continuing Legal Education/ NJ State Bar ICLE/NJSBA 2007, 2006, 2005, 2004, 2003, 2002, 2000, 1999, 1996
Elder Law and Estate Planning- American Bar Association Miami 2007
Elder Law Practice, New Ethical Ideas to Improve Your Practice by Giving Clients What They Want and Need American Bar Association Hawaii 2006
South Plainfield Seniors- New Probate Law 2005, East Brunswick Seniors- New Probate Law 2005
Old Bridge AARP 2002; Guardian Angeles/ Edison 2002; St. Cecilia/ Woodbridge Seniors 2002;
East Brunswick/ Hall's Corner 2002;
Linden AARP 2002
Woodbridge Adult School -Wills and Estate Administration -2001, 2000, 1999, 1998, 1997, 1996
Woodbridge Housing 2001; Metuchen Seniors & Metuchen TV 2001; Frigidare/ Local 401 Edison 2001; Chelsea/ East Brunswick 2001, Village Court/ Edison 2001; Old Bridge Rotary 2001; Sacred Heart/ South Amboy 2001; Livingston Manor/ New Brunswick 2001; Sunrise East Brunswick 2001; Strawberry Hill/ Woodbridge 2001;
Wills and Elder Law - Metuchen Adult School 1999,1997,1996,1995,1994,1993
Clara Barton Senior Citizens- Wills & Elder Law-Edison 2002, 1995
AARP Participating Attorney in Legal Plan for NJ AARP members 1999-2005
Senior Legal Points University of Medicine & Dentistry UMDNJ & St. Peter's-2000, 1999,1998
East Brunswick AARP Wills 2001; -Iselin/ Woodbridge AARP Wills 2000
Metuchen Reformed Church; Franklin/ Somerset/ Quailbrook Seniors 2001
North Brunswick Senior Day 2001
Wills, Elder Law and Probate-South Brunswick Adult School & Channel 28 TV 1999, 1997,1993
Wills and Estate Planning-Old Bridge Adult School 1998,1997,1995
Senior Citizen Law-Perth Amboy YMHA 1995; Temple Beth Or 2002;
Wills, Living Wills and Probate-Spotswood Community School 1995,1994,1993
Wills and Probate-Sayreville Adult School 1997, 1996,1995,1994
Living Wills-New Jersey State Bar Foundation and St. Demetrius, Carteret 1994
Wills and Estate Planning-Edison Elks and Senior Citizens January 1994
"Legal Questions Clinic" Metuchen Adult School March 1995,1994,1993
Estate Planning to Protect Families-Metuchen Chamber of Commerce April 1993
BUSINESS AND AMERICAN BAR ASSOCIATION SPEAKING ENGAGEMENTS:
Improving Your Elder Law & Estate Practice San Francisco, CA 2007
Elder Law and Estate Planning- ABA Miami 2007
Elder Law Practice, New Ethical Ideas to Improve Your Practice by Giving Clients What They Want and Need ABA Hawaii 2006
Marketing Success Stories ABA Toronto 1998
Opening a Business-Sayreville Adult School 1997,1996,1995
Olympians of Marketing- ABA Annual Meeting-Orlando, Florida 1996

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