 Inside Hawaii Real Estate, a show dedicated to providing up-to-date information used to Hawaii home buyers, sellers, and investors. I'm Will Tanaka with my co-host, business partner, and wife, Leone Lam, a realtor with over 20 years of experience in various leadership roles in the Hawaii Real Estate industry. Thanks Will. Will is also now a full-time realtor with a background as a lawyer and the former head of a Hawaii title and escrow company. And we work as a team together to keep you informed about the latest in Hawaii Real Estate. And we're very excited about today's topic because we're going to be learning some very important things about reverse mortgages. And we've brought on Wendy Oshiro and Paige Sue, a very special mother and daughter team of experts to help us out. And Wendy Oshiro, she's a certified reverse mortgage specialist for over 16 years. And did you know she's only one of two people in all of Hawaii with that special designation for reverse mortgage specialist? She's currently a branch manager for Mutual of Omaha Reverse Mortgage and she got her degree in secondary math from UH Manoa. So she knows about numbers and reverse mortgages. And her daughter Paige Sue, so she's actually shadowed her mom since she was 16 years old. Wow, runs in the family. And she's also a reverse mortgage specialist since 2018. She's a proud graduate of Hawaii Baptist Academy and the UH Shiloh College of Business. And she got her degree in marketing and management. So welcome, Wendy and Paige. Thank you. Welcome. Thanks for having us. Thank you for being with us. And so, you know, for anyone purchasing a home or for people that have purchased and they needed to use financing to make the purchase, they might be familiar with loan types like conventional, like USDA, VA, adjustable rate loans are kind of common right now in today's market. They're becoming more increasingly common. But you know, today we're really focused on talking about reverse mortgage loans. And so we want to learn together from you to really help to better understand the concept of reverse mortgages. And we were really hoping that maybe you could share some stories with us about how reverse mortgages have helped people right here in Hawaii. So let's just jump right into that. All right. Thank you so much. Thanks for having us. And I think the first story that we want to share is about our family. And it's kind of a different type of story. It's actually why we didn't do a reverse mortgage. And back in 2005 and 2006, my parents suffered strokes and they lost their independence. And as their power of attorney and successor trustee, I had the responsibility of figuring out how to help them. And my dad wanted to stay in the house. And he trusted me and trusted me with the job of finding a way to do it. Fortunately, when I was offered information from one of my parents about a reverse mortgage, I, I gladly refused it because I thought it was a sham. Why would I want to do something like that for my parents? Why would I want to put them in a reverse mortgage of all things? So unfortunately, I said those things, not truly understanding how it worked. I never did any research on it. I just went based on what I heard from other people. And even just briefly, I searched it on the internet and I found some unfavorable things about it. And so I, instead of looking into one and possibly helping my parents stay in home for the rest of their lives, I had to sell their house because I had to figure out a way to pay for their care. So it wasn't until after I sold their house that I had quit my job and I had time. So I was looking at different options for them and reverse mortgages kept coming up on the internet. And so I, I decided to look at it. And that's when I discovered that it could have been a solution to help them stay in their home. And the cool thing about this whole thing was, you know, one of my students, the one that introduced me to his mom who had that reverse mortgage solution, he told, he came to visit me and heard from me that I had actually changed a heart about the reverse mortgages. And then he went and told his mom who told her friend. And I was hired as a reverse mortgage specialist at a bank. That was over 16 years ago. So that's how I got into it, you know. And so over the 16 years, somewhere in there, my daughter also joined me as at that time it was like a media specialist, but she heard me talk about reverse mortgages all the time from when she was in elementary school. So she picked up on a lot. And right at graduation, she's from HBA, she started working with me. So then she went to Shidler College of Business. And right after graduation from that, she joined my team full time. So it's been a pleasure serving with my daughter. And we've collected many, many stories over the years. And we thought we would share some, some of these scenarios with your audience. Because stories, I think, do a good job of teaching people how things work. So we hope that your viewers will enjoy the next few minutes and hearing about how Kokuna have lived better lives because of this unique solution. That is fantastic. I mean, it's like full circle, you know, from your parents' situation and nursing care and having to sell their home. And did you want to kind of talk about that situation, how reverse mortgage would work in that situation, or possibly other stories that you wanted to share? Sure. My parents had a lot of equity built up in their home. The month before my dad had his stroke, he had actually paid off his, made his last mortgage payment. So the house was free and clear. And what I should have learned at that time when it was an option was how the reverse mortgage would have allowed my parents to be able to tap some of that equity in their home so that we could make the necessary modifications to it so that they could live safely. So my parents lived, their living room, their living area, I guess you'd say, was like 13 steps up. And my dad was paralyzed. So in order for him to get up those stairs, we would have to put a chairlift and I'm thinking in my head at that time, ah, can't afford it, can't afford it. You know, oh, we'd have to put in a walk-in shower. Oh, can't afford it, can't afford it. You know, I always just flat out rejected the reverse mortgage. And so it could have actually given my parents several hundred thousand dollars to be able to afford the modifications and to pay for care in addition to the long-term care insurance that they had, you know, so they could have spent the rest of their years in their home. And that's what we try to teach the public about our customers about how it can work. But you know, it works differently for different people. Like because there's no restriction on how the funds are used, people are using it for all kinds of reasons. So we actually do have quite a few scenarios that we can cover. And then if, you know, our audience has additional scenarios that they'd like to run by us, they can always do that later. This is by no means exhaustive, what we have to share with you all. So how would you like to start? Well, so how about a situation where, you know, oh, there are a couple married for a long time and unfortunately, one spouse passes away. So now they have reduced income and they have significant medical bills that they've incurred. So how would a reverse mortgage benefit, you know, that widow in that situation? Yeah, Paige and I were just talking about that. So, Paige, do you want to take this one? Yeah, sure. Unfortunately, we have helped several seniors who are in this situation. Oftentimes it's the wife who outlives the husband. And once her husband passes away, she goes from, like you said, from two incomes to one income. But usually the expenses don't go down. You know, oftentimes, maybe she still has a mortgage payment she needs to make. She might have her own medical bills or there might be medical bills left over, you know, from her husband who passed away. And just general living expenses like food and utilities and things like that, it really adds up. And for a lot of our kupuna that we help, many of them are on fixed income. For a high percentage of them, they're relying mainly or completely on social security to pay for all their living expenses. And oftentimes, if you look at their annual benefit, like how much is social security giving them every year? Sometimes it's like even under 20,000 and they live in Hawaii. So, yeah, a lot of times if you have a spouse pass away, these seniors are really looking for help with just those basic expenses. Like they are struggling to afford that monthly mortgage payment and might be struggling just for basic living expenses. So, if a widow or a widow or does the reverse mortgage, oftentimes it's to help alleviate that monthly mortgage payment if they still have a balance. And I guess we'll sprinkle throughout this discussion, we'll sprinkle in the basics of how the reverse mortgage works. But one of the ways it's different from a traditional mortgage is that, you know, your traditional mortgage, you have to pay your bank, your principal and interest payment every single month or you get foreclosed on. With the reverse mortgage, one of the ways it's reversed or different is that the lender actually is giving the senior access to some of their equity while they're living in the home. So, the bank is paying them, essentially. And as long as they're living in their house and as long as that senior is continuing to pay their normal homeowner responsibilities like taxes, property taxes, homeowners insurance, keeping their house in good condition, maintenance fees, as long as they're doing all those things that they would normally do as a homeowner, they do not need to worry about making any payments to the reverse mortgage. And that's a game changer for a lot of our seniors, especially the ones who are trying to navigate life in the aftermath of losing their spouse. Because, you know, there's also that human element of grief. Like, you know, they're grieving, they're lonely, they're trying to figure out how to do life without their, without their spouse. And you don't want to have financial stress on top of that grieving process. So, it's very rewarding to help seniors who are in that type of situation. Ruth, you want to add on to that, mom? Um, no, that was well done. I just had a question I wanted to address kind of rolling back to the initial, you know, and you're sharing a personal story, Wendy, and just sort of how, when it was presented to you, the concept of a reverse mortgage for your personal situation with your parents, but you mentioned that like, no, like that wasn't something that you wanted to consider. So, I wanted to address that like the stigma or why do you think that that is the case where, you know, people are not really understanding or educated or whatever and they're thinking reverse mortgages are not a good solution. You know, and if you could maybe kind of hit on that a little bit. Well, there's some, some untruth or myths that are very common when it comes to reverse mortgages. And I think the main one is that the lender takes your house. So, when people get a reverse mortgage, they're thinking, oh, I'm signing my house over to the bank, you know, or giving away the house, we're not going to get an inheritance, you know, and all of those things are false. That's not just not true. It basically works the same way a mortgage does where the lender is going to use the home as collateral. So, there's going to be a lien on the property. And then the owner or the borrower wants to repay the loan they can and then the lender releases the lien. And if they say they pass away, the borrowers pass away and they leave a loan balance, well, the heirs can pay back the reverse mortgage balance. The lender releases the lien, they get to keep the home or they can refinance the loan balance in their own names, you know. So, there's options for both the homeowner and the heirs to be able to keep the property. So, you know, hopefully people that are listening out there, you know, it's not true at all that the lender is going to take ownership of the house. If you look at the title, it's still in the homeowner's names, you know. So, that's one. And then another, I think the other one is that it's for poorer people. You know, it just has a negative, somebody told me, you guys should rename it to something else. I'm like, I can't rename something that's nationally known as a reverse mortgage. But what we're finding now is more and more people, even high net worth individuals, are using the reverse mortgage to leverage equity for whatever reason. And they usually have complex financial situations. So, for them, you know, there's different types of reverse mortgage loans. Some people can access, you know, a million, two million, three million dollars in equity, depending on the value of their homes. So, it's becoming a more acceptable tool now, which is really great because it can help people who are planning for retirement to look at it as a tool ahead of time, you know, to put it in their plan instead of a last-ditch effort to, you know, save their house or to cure some other financial issue later on. But PhD, can you think of other myths that are out there that we have to frequently address? Well, I don't know if it's a myth, but I've had people say this to me, and a lady actually walked up to me and got in my face when we were doing a senior expo one year. And she walked up to me and leaned in my face and she said, you know, I think it was her auntie. My auntie did a reverse mortgage and the bank took away her house. What you guys are doing is terrible, terrible for people. And then she walked away. So, I think a lot of people have maybe heard stories anecdotally where auntie or grandma or grandpa had a reverse mortgage and then seemingly out of the blue, they got foreclosed on and they lost their house. So, we've heard stories like that, but often if you dig a little deeper and you ask why did that happen, you know, why did they get foreclosed on, it's always because of a failed responsibility, like how we were talking earlier, the reverse mortgage is a loan. So, when you get any type of loan, you have responsibilities that you agree to when you sign. And for reverse mortgage, the senior is responsible for continuing to pay property taxes, paying their homeowner's insurance and occupying the house is super important. So, if the senior fails to do any of those things, they could get foreclosed on. And so, for me and my mom, we really emphasize that with our customers or with even with people who are just looking into the reverse mortgage and they're just learning about it as an option, we really emphasize that you have responsibilities if you do this loan and it's especially important to understand the terms and understand that you need to continue paying those property charges in order for the loan to stay in place. So, I think that's maybe one reason why people have a negative perception of it too is they might not have been properly educated at the start about what their responsibilities were when they got the loan. That's a great point. And I'm already learning so much from both of you when they engage. And actually, you know, before we get into more stories, I do have at least one question is, I think when Paige was talking earlier, can you have an existing mortgage and also get a reverse mortgage? So, let's say you qualify, you know, there's an age requirement, but I still have five years remaining to pay off my mortgage. Can you also get a reverse mortgage or do you have to pay everything in full? So, that's a good question. Most of our borrowers get a reverse mortgage because they're trying to pay off an existing mortgage balance. So, like I mentioned earlier, you know, if you're paying $2,000 a month on your mortgage, you have to do it. There's no question about it. Otherwise, you could default and get your property foreclosed on. So, they look at a reverse mortgage as saving them from having to make that payment. So, if, say in this instance, a homeowner has a mortgage, $2,000 a month is what they're paying, and they successfully refinance it into a reverse, suddenly that $2,000 a month stays in their bank, they don't have to write a check to the lender. So, that frees up $2,000 a month, $24,000 a year that they could be using for other expenses or just to keep as an emergency fund. So, I know what your question is probably more along the lines of can you have two mortgages at one time? Was that your question? Can you have a regular mortgage and a reverse? Well, actually, you kind of answered the question, but yeah, I mean, that may have been my second question. Okay, so real quick, no. The reverse mortgage has to be in the first lien position, so that means if there's another mortgage on the property, that lender would have to say, oh, we're okay with being in the second position and you don't know of any lenders who are. So, your reverse mortgage is usually the only, well, is basically the only loan that a homeowner will have. Yeah. And you know, I remember when we were just chatting a little bit earlier. So, let's say, so you have to own a home, well, what are like the basic requirements? So, you have to have a own a home, you have to be a certain age, is that correct? So, there's two ways that you can do a reverse mortgage and one is when you don't have to own a home. But Paige, I'll let you go over the requirements for doing a refinance, which is when you currently own and occupy your property and you want to do a reverse mortgage. So, Paige, what are the requirements for that? Yeah, so Will was already hinting at it that there is an age requirement for the reverse mortgage because it's designed for seniors. So, for the most common type of reverse mortgage, the home equity conversion mortgage or HECCM, that's the FHA insured reverse mortgage and the minimum age for the HECCM is 62 years old for borrowers. And then, like my mom mentioned, it's an owner occupant loan. So, you have to own the property and you have to live there as your primary residence. So, if you go on, you know, a cruise once a year or if you have a second home where you're at a couple months out of the year, that's okay. But the house you do the reverse mortgage on has to be your primary residence. And then, like we talked about earlier, you have because you still remain on title and that house is fully yours, you have to continue all your normal responsibilities like paying your taxes, paying your insurance, any maintenance fees if you have any and continuing to maintain the home in good condition. So, the other way, the other qualifications are if you're going to purchase of a new primary residence using a reverse mortgage and this is the one that I think a lot of people are just confused about. So, I'm going to do my best to try and explain it to you here. So, what Paige was talking about was the qualifications for refinance, right, when you currently own your home, you want to maybe extract some of that equity so that you can use it for, you know, whatever purpose you wish. But there are some people who are renting and let's say renting and want to buy a new primary residence. They're retired, they want the security of owning their own home instead of continuing to rent. And maybe they have a large some of money that they saved up to put as a down payment. Well, a senior in that situation can actually get more buying power through a reverse mortgage. So, for instance, let's say they had a half a million to buy cash and, you know, I'm sure you've seen it, maybe snowbirds they say from the mainland who come. Maybe they want to move here permanently. They have sold their property on the mainland. They have, they think they can buy cash here. Maybe they have, you know, a large sum of money, but when they come here, they realize, wow, it's hard. It's hard to, it's competitive. This market is very competitive. It would help if we had a little bit more buying power. So a reverse mortgage for purchase in that case can actually help that buyer with more funds to make the purchase. So the way it works is that the reverse mortgage is going to be on the new primary residence before they even move in. So, you know, the lender will have to do an appraisal, you know, on the new new property, you look at the purchase price, and then they determine how much they will give the borrower towards that purchase. So combined with their down payment, they can secure a new primary residence with the with the Hecum and not have to worry about ever making a mortgage payment going forward for as long as they, again, remain in their property, pay their property taxes, homeowners, insurance, maintenance fees, whatever property charges there are. But the cool thing is they don't have to make a mortgage payment from then on. So the requirements for that, for that senior who wants to buy a new primary residence are basically the same. You got to be 62, except you have to intend to occupy the property and you must do it within 60 days of close of the transaction, you know. But that's how it can work for somebody who wants to get a new home in paradise. They can do that with the reverse. Wow. Oh, and then one thing I'll add really quickly is that for both the refinance and the purchase, you might be wondering like, oh, you guys don't have any income or credit requirements. And we do, we look at income and we do pull a credit report as part of the process. But the way we evaluate a senior's, whether or not they qualify financially, it's a lot more flexible than the requirements are for a traditional mortgage or traditional refinance. So if you would like to know whether or not you qualify, you can go ahead and call us and we can run the scenario for you. Just wanted to add that. Just real quickly to tag along with that is the reason why we have income and credit requirements is to just ensure that the home, the borrower can remain in their home for a long period of time. You know, that it's just not a band-aid fix just temporarily for a year or two, but that the reverse mortgage actually helps them accomplish their goal of staying in place or aging in place for years to come. Yeah. Wow. Okay. So I had no idea that you didn't have to own a home. So that is news to us. And I'm sure news to many of our viewers. So, wow, I mean, so sorry, we got away from telling stories because we're learning so much. But as you know, we're kind of winding down, but is there any one other, maybe a short story that you might want to share about, whether it's about emergency funds, dealing with social security or just making retirement possible? You have a good one, Paige. You want to go ahead and share? I have a lot in my mind. I'm going to let you go. Oh, okay. So this is like true for a lot of our borrowers. We've helped so many over the years. One of the things that people dream of when they're in their 60s is retiring. Some people really want to retire, but they just can't do it because they just don't have enough income. So I was introduced to someone who didn't know anything about the reverse mortgage. And this person just thought that they could never retire. And then after educating them about it, they realized that this was a good solution for them. And they went ahead and they got it done and they're so happy. And so, you know, if that's, you know, when you have customers that are in tears at the close, I mean, it's just the best thing ever. You can, Paige and I know that we can change people's lives. And the important thing, though, is we do it not through like emotional tugs at the heart and trying to get them to feel that the reverse mortgage is the right thing. For us, it'll come when they know it's the right thing. So we focus on education. And, you know, I hope you can tell from today that we do have a lot of information that we can share with people. We want them to understand their situation in terms of their reverse mortgage so they can see if it's suitable or not. There could be other solutions that are better for them. And we're not here to make a sale. We're here to make sure that people make informed decisions that bless them for the rest of their lives. So that's what we'll leave you with. That's awesome. Yeah. And, you know, Paige and Wendy, I feel like I feel there needs to be a sequel to this discussion because I know we didn't even get into, like, you know, there's so much more. And we will, and I have already learned so much and just appreciate your time, efforts, energy. And, you know, we definitely might hit you up for that sequel because I think there's more discussion to be had on reverse mortgages. Thank you so much, Wendy and Paige. You guys are amazing. Aloha. Thank you. Thank you so much for watching Think Tech Hawaii. If you like what we do, please like us and click the subscribe button on YouTube and the follow button on Vimeo. You can also follow us on Facebook, Instagram, and LinkedIn, and donate to us at thinktechhawaii.com. Mahalo.