Boston Estate Planning and Probate Lawyer & Attorney : Gosselin & Associates Law Firm : Serving Boston, Winchester, Hingham, Wellesley, Manchester

Today, several of the new skin products being marketed tout that they can reverse the signs of aging. They make claims that they can remove wrinkles or increase energy or improve memory. I don't know if any of these products can deliver on their claims. But for seniors 62-years-old or older who own (or almost own) the home they live in, there is a way to reverse one thing in their lives, the mortgage on their homes.

How? In a typical mortgage, a home owner pays the bank a monthly amortized amount. In a reverse mortgage, a home owner pays the bank a monthly amortized amount. Does this sound too good to be true? Is this another anti-aging product gimmick? It's not. For many seniors, a reverse mortgage is a sound financial planning tool, and according to Brett Kirkpatrick of Mortgage Financial Services , "A reverse mortgage might be the ideal option for seniors to maintain their financial independence."

Some Reverse Mortgage History

Reverse mortgages have been available in the United States since 1961 but with considerable variation from one region of the country to another. In 1991 the Federal government expanded its insurance of reverse mortgages, thereby increasing availability across the map. With the rising cost of healthcare, unanticipated increases in inflation, pension plans going under and the unpredictable nature of Social Security, more seniors are looking towards their houses for the cash they need.

In fact, as property values have risen, a number of seniors who took out reverse mortgage loans years ago are returning for second and even third reverse mortgages to harvest the additional equity that has built up in their homes. "Most senior homeowners just want to remain comfortable in their own home." states Ed Barrett, a reverse mortgage expert from Your Home for Life in Westwood, Mass. "With the rising costs of everything today, that is becoming harder and harder to do. Now, with the federally insured reverse mortgage, there is a new option available that really provides for financial security and peace of mind. It really can be 'Your Home For Life'." According to the Federal Housing Administration, which insures most reverse mortgages, by September of 2005, homeowners had taken out about 43,000 reverse mortgages, up from about 37,800 the year before and from 7,700 in 2001. The demand continues to rise with 56% more loans taken out in the first quarter of 2006 than in 2005.

The Ins & Outs of Reverse Mortgages

To qualify for a reverse mortgage, at least one person on the home's title must be 62 years old, the home must be the owner's primary residence (i.e., the homeowner must actually live in the home) and the home must be owned outright or the reverse mortgage loan must be used to pay off the outstanding mortgage balance.

The Federal reverse mortgage loan program has a cap on the size of the mortgage loan it provides, so for those seeking amounts in excess of the Federal limits, state programs and private lenders are a better choice. For both Federal and state programs, there may be restrictions on the types of residences that qualify. For example, under the Federal program condos are eligible, but shareholder-owned cooperatives are not. In Massachusetts, SFR, MFR (1-4 units), Condo's, and HUD-approved manufactured housing are all eligible. Loans generally are written for no more than one-half to two-thirds the value of a home and even if the value of the home changes while the loan is outstanding, the borrower only owes the amount of the loan. The repayment amount can never exceed the value of the home. In fact, under the Federal program, the government makes up the deficiency, if any, to the lending institution, and while Private Placement programs are not insured, all are "non-recourse".

The borrower decides how to receive the loan money. There are four payment options: (1) an up-front lump sum payment; (2) a line of credit; (3) fixed monthly payments; and (4) a combination of a line of credit and fixed monthly payments. With any of these options there are fees and costs, but many of these are the same fees and costs that would be incurred with any loan. For example, there is an origination fee, an up-front mortgage insurance fee, an appraisal fee, and standard closing costs. As far as Uncle Sam is concerned, the money received from a reverse mortgage is not taxable as income, regardless of the way the money is paid. Likewise, many states do not consider reverse mortgages as income. They are not count ed as disqualifying resources for most Federal and state public assistance programs.

A reverse mortgage must be carefully evaluated as it is more complex than other secured loans (like home equity loans, for example). It is suggested that seniors considering one seek the advice of a legal, tax or financial advisor. In fact, the law requires that seniors receive counseling before they obtain a loan. Typically, such counseling covers budgeting and general financial planning, as well as the tax implications and Medicaid/public assistance ramifications. The AARP, Fannie Mae and HUD are three agencies that provide counselor referrals. As previously mentioned, reverse mortgage loans contain fees and costs. However, the fees and costs are low and are not paid out of pocket or up front. They are added to the total loan amount along with the interest, and are paid when the loan's term expires. If a borrower's reverse mortgage is structured as monthly payments "for life", his or her estate may end up paying off the loan.

The Federal reverse mortgage program assumes a life expectancy of 100 years, thus, monthly payments may be lower for seniors closer to age 62 than for those nearer to 100. The life expectancy assumed by Massachusetts, as well as for all other programs is 100 years. One thing about reverse mortgages that seems to worry most seniors is that having a reverse mortgage loan will prevent their children and grandchildren from inheriting their home.

Seniors who want to ensure that their heirs are provided for could take advantage of the new transfer rules under the Deficit Reduction Act of 2005 (passed in 2006) which allows, among other things, transfers made five years before their application for Medicaid to be outside the "look-back period". Being outside the "look-back period" means that the seniors will not be penalized for the transfer. For example, if a senior gives some of her savings and investments to her grandchildren five years before she needs Medicaid, she qualify immediately, provided of course, that she is careful not to make it seem like the transfer was made for the sole purpose of qualifying. Even if seniors do not take advantage of the new transfer rules, the rising costs of real estate should protect the home for their heirs, who can sell the house and use the proceeds to pay off the reverse mortgage note and keep the profit. In fact under the Deficit Reduction Act, seniors with more mortgage on their home may fair better (in some circumstances) that those who have higher equity.

The new law's limit of $500,000 on home equity (which can be increased up to $750,000 at state option) may well mean that seniors owning homes with greater equity could risk not qualifying for Medicaid coverage. If the equity is tapped using a reverse mortgage loan,  seniors may be sheltered from disqualification.

Because You Were Curious: Other Home Equity Conversion Mechanisms The desire of seniors to utilize the value of their homes' equity, while continuing to live in their homes has led to banks offering various other home equity conversion mechanisms in addition to reverse mortgages. Home equity loans, sale-leasebacks and financial arrangements in which seniors retain a life interest in the home while selling the remainder interest are other options for seniors to harness the equity in their homes. However, none of these are as beneficial to seniors or are as easy to obtain as a reverse mortgage.

For example, most home equity loans require that the borrower demonstrate a dependable source of income that can support monthly re-payment obligations. As a result, most seniors in retirement are not likely to have the income that is necessary to obtain a home equity loan. In a sale-leaseback (where the home is sold and then simultaneously leased back to the person for life) or a sale of a remainder interest transaction (where the homeowner retains a life estate in the home while selling the remainder interest) a major concern, in each of these transactions, is that it may be difficult to find a suitable buyer who is willing to buy the home subject to the sort of leasehold restrictions that an older homeowner requires. In sale-leaseback and remainder interest transactions, there are also tax and public assistance issues that may not make these viable options for seniors.

Reverse Mortgage in Summary

A reverse mortgage is a financial planning tool that is increasingly being used by senior homeowners from all walks of life. They are an attractive option that allows seniors across the economic spectrum to have more cash by increasing the liquidity of an asset that most do not think of as liquid, a home. According to Ed Barrett of Your Home For Life, "Reverses offer a better quality of life for those who need more cash flow than offered by a pension or social security benefits and enable much needed repairs to your home to be made, all without making a single monthly payment," and while reverse mortgages can't remove wrinkles, increase energy or improve memory, they do help seniors lead a richer and more rewarding life.

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Gosselin Law's short sale group can be reached at 781-782-6000 or toll free at 877-325-6746. Gosselin Law has convenient office locations in Boston and throughout Massachusetts.

What is a Short Sale:

• When a lender accepts a discount on a mortgage to avoid a foreclosure or bankruptcy.

Why a Lender Would Take a Discount:

• They do not like excess inventory or bad loans on their books;
• Loss mitigators have incentive to clear up defaulted loans - short sales help do that; and
• Lenders know they can lose more money if a home goes to auction.

Lender "Short Sale" Factors:

• Whether the seller deserves a break due to: financial hardship caused by unforeseen circumstances (layoffs, divorce, illness, etc.);
• Whether it would be cheaper to repossess the home, fix and sell;
• How many other properties the lender has in default; and
• If co-signers are on the loan and can help pay the mortgage balance.

The Short Sale Process:

• Acquire a professional (such as a real estate attorney) with short sale experience.
• Contact the lenders 'loss mitigation department' to discuss the possibility of a short sale and determine the lenders process for completing the sale. This sometimes involves acquiring a 'Short Sale' or 'workout' packet.
• Seller must issue a signed 'Release' or 'Authorization to Release Information' to authorize the release of personal information about the loan and the property for the buyer or escrow agency.
• Lender will review the settlement statement indicating: sale price, loan balance, expenses, commissions and fees associated with closing the sale.
• Seller must complete a 'hardship letter' explaining the reason for wanting a short sale. The letter should include all information regarding the financial circumstances of the seller along with bank statements, investment account information, pay stubs and other necessary financial information.
• The lender will connect with the broker to provide a price opinion based on the condition of the home, market value, maintenance costs, etc.
• The lender reviews the purchase agreement and real estate commissions and weighs them against the cost of repossessing the home to sell or auction.
• If the lender finds the situation works in their favor, the short sale will proceed with the terms negotiated in the purchase and sale agreement.

Short Sale Mistakes to Avoid:

• Don't low-ball your offer. Lenders are trying to minimize loss and have a good sense of property values so make your offer as tempting as you can while staying inside your profit guidelines.
• Have a knowledgeable short sales professional on your side. Lenders are busy and do not have time to explain the process so make sure you know what you are doing, or find someone (like a real estate attorney or a broker with short sale experience) who does.
• Don't assume each lenders short sale process is the same. Each lender has different documents, requirements and regulations so don't foul up by making assumptions.
• The fewer loans on the property - the smoother the short sale process. Avoid complicating an already complex process by having a good handle on what's owed on the home.

Why Short Sale Knowledge is Important for Brokers and Real Estate Agents

• You can recognize  the opportunity to sell a home and receive commission on a home that would otherwise be repossessed by the lender or auctioned.
• To develop a favorable reputation among potential buyers (who stand to purchase a discounted home with a short sale) and among sellers (who will no longer go into foreclosure or declare bankruptcy) let the experienced short sale lawyers at Gosselin Law guide you through the MA short sale procedure. Very often the legal fees are negotiated with your lender as part of the short sale procedure. Gosselin Law's short sale group can be reached at 781-782-6000 or toll free at 877-325-6746. Gosselin Law has convenient office locations in Boston and throughout Massachusetts.
Tags: Boston law firm, Century 21, Gosselin Law, Massachusetts Real Estate Attorney, Real Estate, Real Estate Broker, Short Sale, bankruptcy, boston, boston lawyer, boston short sale, boston short sale lawyer, foreclosure, foreclosure relief, gosselin and associates, lawyer, lender, loss mitigation, ma short sale, massachusetts lawyer, massachusetts short sale lawyer, mortgage, refinance, short sale lawyer, short sale procedure, short sales and massachusetts
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The problems are starting to happen:

• A loan officer who gets caught pretending to be a borrower at closing.
• A borrower dead for 15 years - still on the title, so his 48 year-old son with the same name takes a reverse mortgage, and almost gets away with the money.
• An elderly woman on Medicaid benefits is talked into taking a lump sum  reverse mortgage and her otherwise protected money is taken for reimbursement by Medicaid, leaving her penniless.

Mortgage scams have been around as long as there have been mortgages (as you've learned in past blogs, reverse mortgages have been popular since the Roman Empire - literally "loans until death").

Reverse mortgages are available in Ireland, India, United Kingdom, Australia, the U.S. and other countries in various forms. "Life loan" (Irish/UK term for a reverse mortgage) programs are very similar to U.S. reverse mortgages. Here's a link to a program brochure for Bank of Ireland's life loan program: Bank of Ireland.

There are significant differences in these programs compared to a typical U.S. FHA reverse mortgage. First, the borrowing limits are tied to age and are quite low, generally around 25% of property value. Second, the interest rate is fixed for 15 years and there is a pre-payment penalty for early payment unless it is due to death, moving out of the property for more than 6 months or the sale of the property. Lastly, the program will not lend against property that appraises lower than €200,000 (about $275,000) although reverse mortgage loan limits are quite high at €400,000 (about $550,000).

One big difference between U.S. reverse mortgages and the Irish program (similar to the UK and Australian programs) is the borrower is required to have independent legal advice as part of the transaction. This would be a very positive step for the U.S. reverse mortgage industry, because so many elders do not understand the full consequence of their borrowing and the U.S. counseling certificate program is limited in its scope.

Many experienced elder law attorneys who could affordably advise elders that having each potential borrower retain an elder law lawyer would not be a large economic burden but could reduce the risk of improper loans substantially.

Not only does the Irish reverse mortgage program require legal counsel prior to and at closing, but it contains a unique requirement that would help reverse mortgage servicers recoup loan proceeds more efficiently. The Bank of Ireland reverse mortgage program requires the borrower to have a will and to notify the bank of its contents (as to executor) prior to closing.

The long list of new reverse mortgage products coming to the market reek of the influence of sub-prime lending and of Wall Street's thirst for profits.

These new reverse mortgage programs, for the most part, are not written to make reverse mortgages more affordable or understandable, but rather to make them more profitable to both mortgage lenders and Wall Street.

In the past weeks, Congress picked up the cause of elders with reverse mortgage specific components of the FHA Modernization Bill working its way to President Bush's desk. More important for the reverse mortgage industry, this bill increases FHA lending cap limits, reduces the maximum origination fee and makes the HECM (Home Equity Conversion Mortgage) product more flexible (i.e., allowing a HECM for the purchase of real estate, which can be compelling from an estate planning perspective under the right circumstances).

Watch Congress, HUD and responsible mortgage wholesalers such as Mark Burton at Beacon Reverse and respectable mortgage brokers like Ed Barrett at Your Home For Life and Brett Kirkpatrick at Mortgage Financial Services to continue to be watchdogs for the reverse mortgage industry. They will help guard against it blowing up into a sub-prime-type fiasco, only hurting elders by limiting access to their home equity just when they need it most.

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From the Summit Mortgage Company Website: Wednesday, May 23, 2007

Summit launches reverse mortgage group

Summit Mortgage rolled out a reverse mortgage division today as the firm looks to capture more business from the growing number of Greater Boston retirees. Summit, which was founded in 1996, is a private mortgage banking firm with headquarters in Boston.

Summit cited figures from the National Reverse Mortgage Lenders Association, which showed that Boston experienced a 97 percent jump in the number of federally insured reverse mortgages during the past year; there were 2,263 reverse mortgages in 2006, compared with 1,148 in 2005.

A reverse mortgage "gives our clients financial independence and allows them to remain in their homes as long as they wish without being forced to sell due to rising medical costs or other hardships," Richard S. Fedele, chief executive of Summit Mortgage, said in a statement.

(By Chris Reidy, Globe staff) Posted by Boston Globe Business Team

ALSO from the Summit Mortgage Website:

SUMMIT MORTGAGE TO STOP ACCEPTING NEW LOAN APPLICATIONS

BOSTON, Mass., October 11, 2007 --- Summit Mortgage announced today that it will no longer accept new loan applications and will wind down operations. The company expects that all loans currently in process will be funded.

The Company has been bombarded by a rapidly deteriorating mortgage environment and despite recurring capital infusions is unable to continue operations.

According to Richard S. Fedele, Chief Executive Officer and Founder, "This heartbreaking decision was made only after we considered all possible alternatives. We had the best sales, operations, and marketing teams in the business however, the current mortgage environment proved to be insurmountable."

All inquiries should be addressed to Summit Mortgage's counsel, John Drew, Burns & Levinson LLP, 125 Summer Street, Boston, MA 02110 at telephone: (617) 345-3292.

Summit, like many high flying mortgage companies, thought that it could win at the reverse mortgage business just like it had with every other high flying product that came down the pike. The company delcared that it would "capture more business from the growing number of Greater Boston retirees," nothing about helping the retirees, just 'capturing more business.' As Borat would say, "what a virtuous goal, NOT." Summit Mortgage calculated that with an aggessive salesforce, big advertising budgets and deep connections in the real estate industry it could strike it rich with reverses - after all, aren't they just like any other mortgage product?

Reverse mortgages, as Ed Barrett at Your Home For Life likes to say, are "not sold to people, they are presented and either they are a good fit or not". There are no square pegs in round holes at Your Home For Life. Because of the rapid decline in the availability of mortgage products on the market (especially all those foolish 100% financing, sub-prime loans, and negative amortization loans - the three leading causes of the foreclosures and short sales that we are seeing more and more of in our daily law practice) and the surplus of people who became mortgage loan originators in the past few years; there is a great need for these sales people to feed their families. Unfortunately, too many of them are lured to the reverse mortgage business by the thought of high commissions and easy sales to unsuspecting old ladies.

The reality could not be further from the truth. Reverse mortgages ned to be presented in great detail, reinforced by counselors and require comprehensive knowledge of the underwriting and suitability guidelines for reverse mortgage products. And more recently, an encyclopedic knowledge of the ever improving blend of reverse mortgage products available on the market in Massachusetts.

So, the Massachusetts reverse mortgage market will need to suffer a few more Summits (valleys!) and other over-reaching, self aggrandizing money driven companies that merely see reverse mortgages as another product in their arsenal. The market will not accept incompetent, untrained and unscrupulous mortgage vendors, so we will see more collapses of mortgage companies - some because they just can't get as rich as they used to and others because they can't compete in a market that rewards personal service and suitability analysis in the pre-sale. Reverse mortgage abuses against the elderly will increase before we see the clear emergence of the leading reverse mortgage companies that put training, professionalism and ethics ahead of profits. Your Home For Life, Lentegra (Paulo Schneider), Mortgage Financial Services (Brett Kirkpatrick), Greenpark Mortgage (Paul Conlin) and Wells Fargo (Kathleen Burke) are all solid examples of this committment to service and professionalism.

Expert reverse mortgage originators do well by doing good. It's not about big publicity or reaching summits, it's about helping people and providing a valuable service to the community. What's interesting about Rick Fedele's statement is its complete lack of recognition of his customers, instead, he says "(w)e had the best sales, operations, and marketing teams in the business," with no reference to how they knew or cared for their customers or how their closure will impact their customers - I don't think Rick cares what happens to them. Mortgage customers were just marks for making a commission to Summit - echoed eerily in its curtain call statement.

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The call came like all the others, a middle aged woman looking for help in navigating the maze of rules and regulations between bringing her father from his home of many years to what he always called "the waiting room", waiting to die of course.

She explained that she and dad had been together for 43 years since her mother died in a car accident when she was just 8. Dad's spirit was so crushed that his only daughter could not consider another choice - she needed to dedicate her life to caring for her depressed father. He did work, had saved some money, paid for the house, but not much was left after paying for nurse's aides, hospital beds and special medications. The only real monetary value was in the house which had a reverse mortgage put on years ago that has eaten away the home's equity along with a rapidly declining market. The house was ordinary with yellowed walls from the years of dad's smoking two packs of cigarettes a day.

In virtually all cases we are able to establish a Medicaid asset protection plan to conserve assets for the family - and not the nursing home. But here it was quite different. You see, the daughter was terminally ill with lung cancer and COPD, despite never putting a cigarette to her lips, but her devotion to her heavy smoking father came not only with the obvious prices of missed career, romance and a family of her own, but her very health. Dad was still in reasonably good health, driving to his Knights of Colombus meetings, taking in a Red Sox game at Fenway with a close friend from time to time, even driving to Mohegan Sun and Foxwoods from time to time to let it ride.

Since the daughter can no longer care for her father's daily needs (and he has been so conditioned to be waited on hand and foot so as to be completely incapable of doing household tasks for himself), she asked me to place him in a nursing home for the rest of his life since she herself needed nursing and hospice care. As I explained on the telephone that while nursing homes can accept anyone for residency and that MassHeath (the Massachusetts Medicaid service) can provide a myriad of taxpayer paid services, her father would not be eligible because he was not sick or even incapable of caring for himself, that unless they were to private pay, there would no way for him to be admitted to a nursing home.

The quietest moment of my legal career ensued.

The point here is that Medicaid qualification requires both financial qualification, which we hear about all the time, but also medical qualification. The state has in recent months not approved long term medical qualifications, but rather limited 90 day approvals are showing up more and more often. The consequence is ongoing reviews of patients who are clearly qualified for long term care - a true waste of already limited resources. The moral of this story and similar situations is to review potential calamity before things become a crisis. The crisis in this client's situation will result in the use of all the home equity to provide in-home services and a diligent search by A Place for Mom to find an appropriate PACE Assisted Living Placement with and Aid and Attendance Veteran's benefit. Law for Life is singularly focused on the needs of elders and their families in identifying and obtaining the most cost effective and financially conservative course of action possible.

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Have you heard of the new reverse mortgage product? Borrowers can be any age, borrow up to 100% of their equity and can get a fixed rate with no closing costs on a reverse mortgage (and it pays 4 points to the mortgage company!) - Just kidding!

New reverse mortgage products are popping up daily from lenders of all stripes. It's almost like reverse mortgages are the new sexy product category of the mortgage industry - like sub-prime loans were in the past decade. We know where that got us.

But is the market large enough to absorb all these new products? Despite being cool variations of the reverse mortgage theme - such as going to 60 year old (and younger!) borrowers, fixing rates, tying rates to any manner of indexes and making closing costs appear to be lower, the new reverse mortgage products appear to be driven more by a need for marketing than actual innovation. So, elders who are confused enough already about the prospect of taking out a reverse mortgage on their homes, now have to wrestle with the dozens of variations that the reverse mortgage originator can put on the table.

I am all for innovation in the reverse mortgage industry, but I really don't believe that the wholesale mortgage industry is on the right track with creating a myriad of new products. It seems that they are only sending out new product slicks to get the attention of reverse mortgage brokers. This will only invite reverse mortgage abuses. We have seen this pattern so many times before. Wholesalers just make new packaging for good core products - perverting the good with the ugly.

This is not going to work with reverse mortgages. If wholesalers want to increase market share they should do it through marketing support and education. They should make their brokers experts in selling reverse mortgages - not motivated strictly by mortgage sales commissions - but by providing great service to their clients and their communities.

Not every mortgage company should sell reverse mortgages. Reverse mortgages are a specialty product. Reverse mortgages require educated consultative sales people. Yes, they need to be well equipped, but the trend towards more and more aggressive underwriting and riskier variations on reverse mortgages will only backfire on the uninitiated. Our law firm is focused on the education and co-marketing of reverse mortgages to the elder community. We are not interested in selling reverse mortgages, only presenting them and helping elders decide if it is a good fit.

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Getting to Sure: Legal Capacity and the Elder Lawyer in the Context of Reverse Mortgage Transactions

Introduction: Legal Capacity and the Elderly

 In general, the law presumes that all adults have legal capacity unless proven otherwise. The legal standard of proof is “clear and convincing” which means, in essence, that the law sets the bar pretty high for those wanting to prove that someone is incapable of being a legal person and, therefore, unable to be a client or enter into contractual arrangements. That being said, legal capacity is situational, as is the required degree of mental capacity, both depend on the proposed act. For example, a relatively low level of capacity is required for someone to create a valid will (individuals making a will only need to show that they understand that the document they are creating is a will), while a higher level of capacity is needed for providing informed consent to medical care. The degree of legal capacity necessary to establish a lawyer-client relationship lies somewhere between the capacity of a will-maker and that needed to give informed consent to medical care. In order for prospective clients to ethically be considered legal clients, lawyers must be able to establish that the clients have sufficient legal capacity to both become the lawyer’s client, as well as having the legal capacity to take whatever legal action the client purports to do.

Medical Tests and Legal Ethics: What’s the Standard Measure of Capacity?

When dealing with elderly clients, the law’s general presumption of the client’s capacity may be inaccurate in many situations involving elderly clients. When family members (e.g. adult children), brings an aged person to an elder law attorney, in some instances they may be doing so because of some observed events or behaviors that suggest to them that the person’s mental faculties are declining. Such non-clinical observations while not determinative, they do raise the question of whether the person in question has the legal capacity. How then does an elder law attorney determine a prospective client’s legal capacity? 

According to Veda Johnson, who has been a geriatric nurse for ten years working in nursing homes and hospitals in Orlando, Florida, where the elderly population has been growing rapidly for the last ten to fifteen years, assessing the mental acuity of an elderly patient is not simple. There are several kinds of tools in the form of scales or assessments, like the Glasgow Coma Scale for example, that are used to evaluate how “alert and oriented” an elderly person might be. Unlike nurses, lawyers seeking to determine whether elderly clients have sufficient legal capacity do not have any professional tools available to them. There is no standardized procedure or even a universally accepted legal definition. And in both the medical arena and the legal field determining if a person is losing her mental faculties is never a yes-or-no question. 

Each lawyer must make an independent, holistic determination on a case-by-case basis, each time weighing all the facts and circumstances.   Some attorneys rely on their personal observation of the older person plus comments from those who spend time with the older individual. But, determining if one has legal capacity is not the same as rationally determining what makes sense to the according to attorneys’ predilections. So attorneys must be aware of keeping their own prejudices at bay when making a determination. While bizarre or inexplicable behavior can be interpreted as evidence of diminished capacity, eccentricity is not the same as incapacity. But, as one might imagine, the dividing line can be exceedingly difficult to draw. 

The Model Rules governing lawyers’ ethics nationwide are primarily aspirational, but should at least guide lawyers’ decisions about where the line falls. States may also have ethic rules on what constitutes legal capacity in the context of representing elderly clients. In Massachusetts, for example, Rule 1.14 of the Massachusetts Rules of Professional Conduct lays out what lawyers must do if they suspect that a prospective client lacks legal capacity. The rule does not specifically speak to elder attorneys; however, Comment 1 to the rule states in part, “it is recognized that some persons of advanced age can be quite capable of handling routine financial matters while needing special legal protection concerning major transactions.” Entering into a reverse mortgage transaction is more complex than contracting for other secured loans (like home equity loans, for example) so a reverse mortgage can be considered a “major transaction.” There will be times when a lawyer will conclude that a client seeking to obtain legal representation in procuring a reverse mortgage loan lacks legal capacity, but has legal capacity for other contractual matters. If this is the case, there are a few options for lawyers that allow them to represent an elderly client.

Powers of Attorney

One option is obtaining a power of attorney. There are three kinds of power of attorneys. There is the non-durable power of attorney which terminates when the person who created it becomes legally incapacitated. A durable power of attorney, on the other hand, continues to be valid even after the principal becomes incapacitated. The third kind of a power of attorney is the springing power of attorney which becomes effective only upon the happening of an event that has been designated in the terms of the document. All powers of attorney terminate automatically upon death.

It is better for seniors to create power of attorneys when they are legally competent and in good health. But, if there are already health problems, early signs of dementia or Alzheimer’s disease, one should be created immediately. By creating a durable power of attorney for finances, with gifting authority, for example, seniors can appoint someone else to handle their personal finances, including the authority to transfer your assets even after they become incapacitated.

Guardianships

Guardianships are a more formal option than powers of attorney. They involve going through a legal process in the probate courts. There are generally three types of guardianships. First, guardianship of the estate, or as it is also known, conservatorship, which is limited to substitute decision making for matters concerning the incapacitated person’s property (assets). Second, guardianship over the person, which gives the guardian control over decisions affecting the “person’s person”, such as: where to live or whether to consent to medical treatment. Third, plenary guardianship, which grants guardians the power to make decisions over both the person’s property and person. Within the context of these three forms of guardianships, most state statutes permit probate courts to appoint limited guardians; which means, as the name implies, that such guardians have no more power than is necessary to meet the needs of the persons over whom they are appointed.

Joint Ownership Arrangements

Powers of attorney and guardianships are not the only ways of making sure that an older person will have a mechanism in place for taking care of financial affairs when that person is no longer able to do so. Joint ownership arrangements can also be used. The specific forms include joint tenancy, tenancy in common and, for married couples, tenancy by the entirety. The types of joint ownership arrangements have many characteristics in common. One such feature is what happens when one joint owner dies - the other owner automatically assumes ownership and control of what was owned in common. Creating a joint tenancy can be quite simple. Adding a new signature on a bank account or changing a deed on real estate may be sufficient; no special forms are needed. But, creating a joint tenancy can have complex financial, tax and legal consequences, thus, it is probably advisable to consult a lawyer or financial professional for advice before creating one. 

Revocable Trusts

Another alternative to guardianship is creating a revocable trust to hold the older person’s (a.k.a. settlor’s or grantor’s or trustor’s) assets. The trustee of the trust might be a close friend or relative or perhaps a bank’s trust department or some other financial institution. The trust may be structured with the settlor as the sole trustee or in conjunction with another trustee who will take over completely if the settlor is no longer willing or able to handle financial matters. By definition, a revocable trust can be modified as long as the settlor is legally capable of making that decision. If the settlor becomes legally incapacitated, and there’s no alternate settlor, then the trust becomes irrevocable and only terminates upon the settlor’s death.

Reverse Mortgage Transactions and Legal Capacity

Like lawyers, lenders serving seniors 62 or older who do not have the legal capacity to enter into a reverse mortgage transaction can do so with the person or entity appointed in a durable power of attorney or with a court order guardian. Under the federal home mortgage program, HECM and HUD, guardians and attorneys-in-fact or agents named in durable powers of attorney (together referred to as legal representatives) may execute the legal documents incident to a reverse mortgage transaction, provided that they have the authority to do so by court order or per the terms of the power of attorney contract. Part of any reverse mortgage transaction also involves counseling. The law requires that seniors receive counseling before they obtain a loan. Legal representatives can and must request counseling. Whether counseling sessions are between, counselors and legal representatives or counselors and seniors directly, the reverse mortgage counseling code of ethics requires that all counseling sessions, by HUD-approved HECM counseling agencies be confidential in any event.

Reverse mortgages depend on borrower eligibility and living arrangement so it may be harder for a trust or joint owner of a property to become a borrower in a reverse mortgage loan. The trust, for example, would have to be structured in a way that left the 62-year-old prospective borrower/settlor as owner of the property to be mortgaged and the home must also be the settlor’s primary residence. As far as joint ownership, both owners would have to be reverse mortgage eligible. Thus, using revocable trusts or joint ownership as mechanisms to protect seniors at risk of losing legal capacity has some drawbacks. An elder lawyer and financial professional can help seniors and their families decide what options are best for them.

Getting to Sure in an Unsure World: A Charge for Elder Lawyers

Representing elderly clients involve many unique issues for legal and financial professionals. Assessing legal capacity is one of those issues. Many elder attorneys have developed intake forms that include questions which are useful in assessing the legal capacity of prospective clients (as well as run-of-the-mill questions about finances and ownership.) Asking what seems like simple questions like “What day is it today?” as well as questions about medications can be good when trying to decide: (a) does this person have the required legal capacity become a client; and (b) can this person enter into a major transaction like a reverse mortgage? At the end of the day the answers provided may merely help lawyers become more sure (or less certain) about the prospective client’s legal capacity, but at least lawyers would be doing their part in “getting to sure” about that client’s mental capacity as a legal matter.

Gosselin Law provides comprehensive elder law, estate planning and reverse mortgage services.  These services include Medicaid applications; emergency elder law matters; real estate transactions; guardianship; estate tax matters; wills; trusts; Medicaid annuities; Annuity planning for Medicaid; Medicaid trusts; special needs planning and related areas.  Gosselin Law can be reached at 781-729-0313 or toll free 877-325-6746.  Serving Massachusetts and New Hampshire.

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I am happy to report that the Attorney General has promulgated new regulations to protect mortgage borrowers in Massachusetts.  The full text of the regulations can be found HERE.

The gist of the regulation is that Massachusetts will no longer permit mortgage lenders and brokers to make loans on unreasonable terms or that are clearly loans that would be unlikely to be repaid by borrowers.  There are also provisions for disclosure and translation for non-English speaking borrowers.  Hooray for Martha Coakley and the Consumer Protection Division of the Massachusetts Attorney General's Office!

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Reverse mortgages are not just for poor people anymore. I am tired of hearing about reverse mortgages - in the past six months it's as if someone flipped a switch to turn up the noise, not necessarily the quality, of the messaging to elders about reverse mortgages.  

In my practice as an estate planner in Massachusetts I am often called upon to "get creative" on behalf of clients. As one of only a few true legal experts in the reverse mortgage industry, my creativity often opens the discussion with clients about complex uses of reverse mortgages in estate planning.

 I have developed several methods to leverage the equity value of a client's house to enhance either the economic benefit or overall personal security of clients. To explain the concepts in shorthand, Gosselin Law claims a servicemark on the shorthand names of many of our approaches. Here are examples of somewhat magical things that can be done with reverse mortgages as an estate planning tool.

GOLDEN TRIANGLE(sm). The Golden Triangle demonstrates to elders looking to plan for long term care how to use the reverse mortgage as a tool for closing the five year gap provided under the new Medicaid laws. It is a triangle as there is an estate plan, a long term care plan and a reverse mortgage plan coming together to provide for both current and future long term care needs. Here's how it works:

Mary, a 77 year old widow in Boston, has lived in her own home for over 40 years. This is the house that sheltered her family, where her dear husband passed and where she intends to stay until the very end. Although Mary has a good pension from the Commonwealth of Massachusetts, Social Security and adequate short term savings,  Mary is concerned that if she needed long term medical care that she could not afford to remain in her home or pay for a nursing home. Mary also wants to provide as much for her family upon her death as possible; after all she and her husband both worked hard to be able to leave something for their three children.

Mary's good health and family history of longevity helps indicate that Mary will likely grow to be very old. Her home is valued at $450,000 in today's real estate market. Based on her age, current interest rates and the property's values, Mary's HECM line of credit will be about $280,000 at closing. Mary qualifies for long term care insurance, but she feels that the $5,000 annual premium, although vitally important to her ability to remain in her home, is too much to pay on her fixed income. As many elder law lawyer advised her to  transfer the house to avoid exposure to a Medicaid lien - but every technique available requires a 5 year waiting period before she would be elegible for Medicaid.  At 77, Mary could live 15, 20 years or even longer - so even with her fixed income and ongoing inflation, she will no longer be able to afford to stay in her home in the not so distant future.

By securing a HECM reverse mortgage line of credit or similar reverse mortgage product, Mary will enable herself to have access to both a current and ready pool of cash, but also an appreciating line of credit that will be available to her for the rest of her life. Using a $5,000 per year draw, Mary will be able to buy the "Cadillac" of long term care insurance (including extensive home care benefits and high benefit limits) which will also serve to exempt her house from Medicaid liens immediately, without waiting for five years. At the same time, Mary's estate planning will have time to season. After five years, Mary will have had the peace of mind in the form of long term care insurance, lifetime financial security, and in her ever increasing available HECM cash and a now permanent estate plan to carry out her wishes. A Golden Triangle, indeed.

An interesting variation on the reverse mortgage that could work well in the Golden Triangle is the "Retirement Mortgage" from Virgin Money. Essentially a child acts as the reverse mortgage lender, documents the transaction as a loan to ensure that he or she is repaid before any other siblings at the time of the elder's death. I am a big proponent of Virgin Money (full disclosure is that I am working with Virgin Money in developing new and exciting products for the US market), on the principle that families should be helping each other first before turning to often high cost products from the financial services community. 

SNOWBIRD(sm). In the Snowbird(sm) we show reverse mortgage companies how to prospect with sunbelt real estate agents to facilitate the purchase of properties with reverse mortgages, primary residences can be obtained with a reverse mortgage purchase money mortgage, and secondary residence by using a reverse mortgage leveraged primary residence in Massachusetts as collateral for the real estate purchase. Similarly, we show elder homeowners how to conserve cash by using reverse mortgages as purchase money mortgages. Here's an example:

Bob and Cathy, 70 and 68 respectively, haved lived in their lovely 4 bedroom home in Newton for over 30 years. Now retired, Bob and Cathy enjoy playing golf, sailing and visiting with their two children and their families (who both live in the Greater Boston area). As much as they enjoy the New England seasons, they enjoy spending the Winter and long weekends in Florida. They have made many new friends and enjoy the Florida lifestyle, especially in the Clearwater Beach area.

Financially, Bob and Cathy have not fared too well. Bob worked for Polaroid for over 30 years, but because of its collapse, his pension benefits and stock savings (all in Polaroid stock) are meager at best. Bob continues to work part time at The Country Club in Brookline, which also gets him some free time on the greens. Cathy never worked outside the home, but has been doing quite well organizing Ebay sales for her friends and neighbors looking to downsize their homes. The thought of doing this at this point in her life brings Cathy to tears, but she and Bob agree that they would enjoy having a place in Florida during their healthy retirement years.

Based on Bob and Cathy's ages, current interest rates and the $800,000 value of their Newton home, they could borrow approximately $425,000 in reverse mortgage cash. They could draw it all at the closing or take some in a lump sum and leave rest to be available for future withdrawals. Bob and Cathy would very much like to purchase a $200,000 condominium in Clearwater Beach condominiums, not far from their favorite public golf course.

By taking out a reverse mortgage as above, Bob and Cathy will have the best of all worlds. They will have the cash they need to buy the Florida condominium outright (and enjoy its appreciation throughout their retirement), a financial cushion in the form of the remaining credit line on their Newton home, and most importantly, will be able to keep and enjoy their home. Of course, interest will acrrue on their borrowings, but between the expected appreciation of the Florida property and the value they place on the two-home lifestyle, Bob and Cathy will have it all in retirement thanks to the Snowbird.

ROBINHOOD(sm). The Robinhood(sm) guides more sophisticated and larger property value elders on the use of asset leverage by using other financial products, especially second to die life insurance. In simple terms, the reverse mortgage is used to pay premiums and the actuarial analysis results in a positive arbitrage for the reverse mortgage borrower. Here's a simple example to ilustrate the idea:

Mike and Sheila enjoy financial security by anyone's measure. Mike, recently turned 65, and Sheila, 66, just sold their successful software company to a larger competitor - realizing over $10 million in restricted stock in the buyer from the sale. Adding that to their $2 million primary residence in Brookline, $3 million Nantucket home and $5 million in other savings, mainly in qualified retirement plans, Mike and Sheila will pass a large estate on to their five children. Or, will they only fill the coffers of the US Treasury? Based on a $20 million estate, Mike and Sheila's estate planning attorney showed them a potential estate tax of over $6 million if they were to die this year.

If we were their attorneys, we would suggest setting up an irrevocable life insurance trust (ILIT) to hold a survivorship (second to die) life insurance policy. As wealthy as they may seem, Mike and Sheila lack sufficient liquidity to commit to a relatively large insurance premium, although the arbitrage on the numbers clearly show the economic benefit of establishing such an estate plan while they are young and healthy. The solution? A reverse mortgage, either on a line of credit basis where premiums are paid annually or a lump sum cash account where Mike and Sheila can purchase their life insurance (through the ILIT) with a single premium.

By using the reverse mortgage to pay the life insurance premium, Mike and Sheila will get the liquidity they need without running afoul of income tax rules or using restricted or otherwise inaccessible assets to pay for the needed life insurance. Upon the second of Mike and Sheila's death, the overall estate will be liquidated and the reverse mortgage paid in full with part of the cash proceeds of the life insurance policy, the balance to be used for paying estate taxes or direct bequests to their family. Based on a sophisticated side-by-side analysis of their reverse mortgage projections and life insurance guarantees, Mike and Sheila can make an educated arbitrage decision without significant risk of economic loss.

We are not licensed to provide insurance or loan products and any decision to proceed with any of these advanced reverse mortgage plans requires you to work with your trusted advisors. But, Gosselin Law can help our clients evaluate various complex uses of insurance and mortgage tools, as well as suggest reliable sales organizations

Gosselin Law is one of the only elder law firms in the country with a reverse mortgage specialty practice. We can assist homeowners in the states where we are licensed or associated with local counsel with the planning of reverse mortgages, coordination of federal benefits with reverse mortgage loan proceeds and gerneral asset protection and estate planning.

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Reverse mortgages are bad mortgage products. Reverse mortgages cost too much in closing costs. Reverse mortgages drain the equity from elders' estates. Reverse mortgage originators prey on the weakest among us. Or so pundits that sell houses, annuities and all manner of ignorant self interested "protectors" of the elderly repeat as if a mantra to ward off the evil of reverse mortgages. Of course, the truth could not be further from their fears.

The US Government needs the baby boomers to embrace reverse mortgages. After all, the national debt has more numbers than my Comcast account, Halliburton needs to keep profitable in Iraq and Americans are living (and getting Social Security and Medicaid benefits) longer than ever. The actuaries tell us that it's not the interest on the national debt, foreign aid or war that will bankrupt the US Government, but rather Medicaid has the power to overwhelm the entire GDP. Where is the money that will pay for all of Uncle Sam' hospital bills?

Medicaid is an issue for the reverse mortgage industry, especially for the reverse mortgage originators that don't know their products and underwriting well enough to advise their customers on the traps. I have been featured recently in the Mortgage Press and the National Reverse Mortgage Lenders Association national teleconference and newsletters as an expert in the intersection of Medicaid regulations and the origination of reverse mortgages.

Here is one of the articles, excerpts from an interview with Atare Agbamu (who writes extensively on reverse mortgage issues):

Traps for the Wary: Reverse Mortgages and Healthcare Benefits -- a conversation with Elder Law Attorney John Gosselin

By Atare E. Agbamu, CRMS

They say old age hardly comes alone. It comes with issues. The same can be said of reverse mortgages, the new pillars of retirement security in these precarious times.

Reverse mortgages come with issues, government healthcare benefits issues. The relationship with government healthcare benefits is deeper and more challenging than most originators and customers suspect.

To help us understand the connection and its implications for originators and customers, I spoke with Winchester, Massachusetts-based elder law attorney John T. Gosselin.

The Managing Attorney of his own law firm, Gosselin & Associates, P C, with offices in Massachusetts and New Hampshire, Mr. Gosselin is one of a few lawyers, in my experience, who really understand reverse mortgages, particularly how they mix with other elder law issues.

Besides overseeing a vibrant probate administration and elder law work, Mr. Gosselin runs a thriving real estate practice, acting as counsel or closing agent in more than 20,000 transactions, advising clients on purchase and sale agreements, mortgages, financial, and title disputes.

A member of the National Reverse Mortgage Lenders Association (NRMLA), Mr. Gosselin has advised and represented lenders in reverse mortgage situations for more than 10 years.

As you will find from our conversation, Mr. Gosselin has thought these issues through. His knowledge, insights, and suggestions will help you serve your customers better. They could help your company avoid some difficult issues too. [Disclaimer: Nothing in this article should be considered legal advice. Seek competent counsel for your unique situation.] The following is a transcript of our conversation.

Atare E. Agbamu: John, what is the loss of Medicaid Eligibility risk for the typical reverse mortgage borrower?

John T. Gosselin: The big risk is being over asset. The way you qualify for Medicaid benefits is to be poor. Medicaid is welfare. So in order to qualify for welfare, you need to be poor. And the government defines poor as a combination of assets and resources. And they define it all as available resources. That's the term that is used. If you have more available resources than the limits that are allowed by law, you cannot qualify for benefits.

The first risk is a borrower holds too much cash in their name, by virtue of holding too much cash, either through a lump-sum distribution from a reverse mortgage or drawing too much down from a HECM [government-insured reverse mortgage] or drawing a small amount from a HECM but not spending it. A lot of our borrowers in the reverse world are used to living on very low amounts of money. So when they start drawing from a HECM, they feel uncomfortable spending it. I have seen that happen where the borrower accumulates relatively modest payments over a short period of time to put them over the asset limits.

The asset limit, commonly, for an individual person, is about $2,000 in liquid resources, in addition to their principal residence. They are allowed to have a principal residence, but they can't have more than $2,000 in total liquid assets at the end of any month. So at the end of any month, they can't have more than $2,000 standing in their name and receive Medicaid benefits.

So the risk is that they are going to draw down or borrow more than what is allowed. By doing that, if they are over age 65, as almost all our reverse borrowers would be, it will automatically put them in situations where they are either going to be disqualified for benefits and/or subject to reimbursement for benefits they have already received. That is the risk specific to Medicaid.

There is another risk which is also related, Supplemental Security Income (SSI), which is an additional welfare program. It is intended mainly for people who are very poor, who have neither Social Security nor virtually any social security income. This is another scheme which the federal government provides for its poorest people. Generally, these are people who never paid into the system by working at jobs which provide for federal social security and insurance benefits. It is not an insurance program; it is a federal welfare benefit. And that program has very strict income guidelines.

Although a HECM advance doesn't disqualify them as income, there is a risk of going over the asset limits. There is income that is assumed to come from those assets. There is a formula that is done. If they are holding too much in assets, they can be disqualified from SSI. Again, holding too much cash is a problem. Having money in a given month is not a problem. They could draw down tens of thousands of dollars if they spend it for their own personal needs, their care, and their protection. They can really spend it for anything. They are spending an asset that is protected, which is their house. At the end of 30 days, they better get that asset back under $2,000. At the end of each month, their cash has got to be under $2,000. And they could not have accumulated other easily liquidated assets, like buying jewelry, for example. They can't buy more than one motor vehicle for their own use. They can't accumulate collectible assets. They can't go out and buy antique furniture that is going to carry a cash value or easily liquidated value. So they are somewhat restricted in how they use their funds, but not terribly.

One other dimension that people should be aware of (I don't expect this to occur often) is that the tenure payment could be construed as income. We usually say that reverse mortgage payouts are never income, that it is always drawing against the value of the house, but the reality is that when the balance of the mortgage exceeds the value of the collateral, it can be recognized as income; because, effectively, it is no longer a loan because the proceeds are exceeding the value of the collateral. The IRS would recognize that as a form of taxable annuity income. That could run into some problems.

Now why I say it shouldn't come up much is that the tenure payment is fairly conservative. The formula used to come up with the numbers really anticipate someone living quite some time before the loan gets upside down; but, in a declining real estate market, you could, potentially, see that become an issue in the future.

AA: From your experience, how valuable is Medicaid Eligibility to the average senior person? For it to be a serious loss, it has got to be pretty valuable.

JG: For the average senior, they are probably going to be receiving Medicare benefits because that is an insurance program that people pay in when they work, and they work for wages. The vast majority of people over 65 are on Medicare benefits.

The Medicaid benefits we are talking about will affect reverse mortgages. It could be supporting a spouse that is in a nursing home. For example, if we have a wife that is in the community and a husband in a nursing home, the wife in the community (it varies by state) on average, is allowed to keep the principal residence and approximately $100,000 in assets. It does vary. More or less, it is $100,000. If she goes over the asset limit, she can disqualify her spouse for the benefits that they are receiving for the husband's care and possibly be forced to reimburse benefits already received.

Most often, I think, when a spouse of someone who is borrowing on a reverse is in a facility [nursing home], they are disqualifying the spouse often unknowingly. This is one of the traps for originators. They should inquire whether or not a spouse is in a nursing facility and determine how that spouse is paying for their care. Sometimes the spouse will no longer be on title so the topic does not come up unless a direct inquiry is made.

There are other ways to pay for nursing care. One of them could be VA [Veteran Administration]. The VA is very low cost, and it doesn't really impact reverses as it is tied to service record and not only financial need. There are also religious and community organizations that provide unique living situations for elders, many of these require turning over large lump sums in favor of lifetime care contracts. Home care services are also coming along that will essentially enable seniors to have nursing care at home on a somewhat more affordable basis. Another place Medicaid comes in is community Medicaid.

Community Medicaid is a program that supplements Medicare. Again, it is generally for the poorest people, both seniors and those under 65. The people whose income and ability to pay for what Medicare doesn't pay for is compromised, so they would go for Medicaid benefits in the community, or they need some special services or in-home care through a variety of community programs.

There are in-home care programs that are coming up every day now in every state, where instead of going to a nursing home, the state will subsidize a certain amount of in-home care. It is that in-home care we need to be concerned with because if it is under the Medicaid program, it is subject to reimbursement. Think of Medicaid like a loan from the government.

AA: So this is a very valuable program for the average senior because it protects their health, right?

JG: The Medicaid program we are talking about is a community health insurance benefit. This pays for every aspect of medical care. It pays for prescriptions. It pays for hospitalization. It pays for virtually any medical need of an elderly person. You could have reimbursement obligations in the millions of dollars for somebody who has a serious illness.

You could have someone who has MS [multiple sclerosis], Lou Gehrig's disease, or a form of cancer that has received hundreds of thousands or even millions of dollars worth of care through the Medicaid system. Yes, it is absolutely a valuable benefit.

To lose the benefit for people who are receiving the benefit would probably be catastrophic. They could put themselves in situations where their medical debt could consume the value of their house. If they have no other means of paying for their medical debt, they could be forced into bankruptcy for their medical debt.

The US government needs to find a way to use the wealth stored in home equity for people's care, I think we'll see a much simpler reverse mortgage product coming very soon, like a low interest rate reverse mortgage that's sold directly or at least wholly subsidized by the US Government to get at people's home equity for elders' medical and home care needs.

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It is time for them to move to a nursing home, but how do they leave their home of so many years? Who will tend the roses? How will the birds (and squirrels) make it through the Winter without their help? Will the new owners be able to make that quirky furnace run properly? Does The Globe deliver to nursing homes? These are the real questions I was asked. I couldn't bring myself to tell them that the house will likely be bulldozered in favor of a couple of townhouses.

I believe that there is a karma to a house, good and bad. When I am working on probating an estate I am often called to go in and evaluate properties. You can almost hear the children singing happy birthday, the puppy chewing the corner of the good oriental rug, the smell of grandmother's garlicky tomato "gravy" for Sunday dinner. Sometimes I hear the raised voices of a bad marriage fueled by alcohol and crushing debt, or the long suffering of a COPD patient dying slowly before their loved ones, and all too often the nightly crying of a lonely widow pining for her long lost bedfellow. Are there ghosts? Is it spirits?

In this modern age so many people think of their houses as mere way stations as they are transferred up the corporate ladder. Or perhaps they never find the family's home as they feel compelled to upgrade their house and furnishings in each new wave of fashion, like shoes or hairstyles. I feel sorry for people who do not have the patience to impart their personal signature on a place; stay a while, you'll like it - and it will like you back.

From a financial perspective, those clients that have stayed in their homes for many years and have been able to pay off their mortgages one payment at a time enjoy much more financial stability than those clients that have progressively taken on more and more mortgage and other debt to acquire real estate they think will make them 'happy'. My Massachusetts legal advice to first time home buyers? Find a happy house. Spend a couple of hours enjoying tea in its living room with the lonely widow before your closing. Ask to keep a photo or chatchke of the seller as a piece of goodwill. Leave a little corner of that awful wallpaper. Stay in the house as long as you can, feel the good karma. And when you sell that happy little house, shed a tear as you drive away.

Elder homeowners' advice from a Massachusetts lawyer? Stand your ground. Don't sell your house until you cannot make up the stairs or you can't get a neighborhood boy to shovel the snow. If the money runs out, use a reverse mortgage to tap that hard fought equity. Take care of yourself, first. Don't let a real estate broker convince you that leaving the house is the right thing to do. Make sure you believe that it is the right thing to do. Ask your kids to move home with you with their families. This was always the way in the old days, and it wasn't such a bad idea.

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First, I expect a lot of competition to sell me a bed, since there will be many more available than needed, so they'll have to offer me incentives to move in. "Free haircuts for life for the first 10 residents. Buy one bed, get another for half-price."

The homes will be far different than they are today. I would expect my nursing home to be named like a major sports stadium, AARP Nursing Centers of America or the Depends Elder Spectrum. Gone will be the TV game shows and nightly bingo - we'll have oldies like Nintendo and Playstation to aggravate our arthritis. On TV, we'll watch reruns of Grey's Anatomy, Family Guy and American Idol.

Instead of that ubiquitous soothing walt