“Gray divorce” — referring to the decision of a married couple over the age of 50 to separate — is a growing phenomenon. According to a 2022 study published in the Journals of Gerontology, the rate of divorce among those ages 50 and older has doubled since 1990 and has tripled for those 65 or older.
Gray divorce can come with a myriad of financial headaches for those determining what post-married life will look like and how previously intertwined financial situations can be separated. Housing is one such issue, but a new column published by Success magazine suggests that a reverse mortgage could play an assistive role.
Nancy Hetrick, founder and CEO of Smarter Divorce Solutions and a divorce financial analyst, discussed the ways that a reverse mortgage could be employed for separating couples who meet the loan qualification standards.
Hetrick told the outlet that these loans “are now fully regulated and insured and are no longer the scam vehicles they were in the ‘80s,” the column read. The Home Equity Conversion Mortgage (HECM) program was created via legislation in 1988, with the first loan having been originated under the program the following year.
“It’s just a really wonderful piece of flexibility and creativity for these couples,” she told the outlet, adding that the partner leaving the marital home could explore a HECM for Purchase (H4P) loan using the equity they have gained. But staying in the home in later life may also prove to be an uneven fit considering the natural limitations that come with aging.
“Maybe this is actually an opportunity for both of them to kind of reimagine the last phase of their lives,” she said.
Earlier this year, Finance of America (FOA) vice president of retirement strategies Steve Resch told HousingWire’s Reverse Mortgage Daily (RMD) that many of his colleagues in the financial planning space are increasingly dealing with issues of gray divorce.
“Another opportunity is the H4P,” Resch said in May. “Planners often don’t realize that they can use that, and many of us are now dealing with gray divorce scenarios. Another scenario where this really comes in handy is relocation.”
“A lot of people have moved to Florida, and when one spouse dies, they move back to be near family,” he added. “So, I think there’s a huge opportunity there. Gray divorce, eliminating that mortgage payment and managing long-term care risks — those are really, in my mind, the biggest opportunities [for the reverse mortgage industry].”