SOURCE: Golden Gateway Financial

June 23, 2009 08:06 ET

Reverse Mortgages Provide Senior Citizens Facing Foreclosure With a Lifeline

As Foreclosures Rise, Savvy Seniors Can Alleviate Debt and Find Additional Cash Through a Reverse Mortgage

OAKLAND, CA--(Marketwire - June 23, 2009) - Many older Americans are facing the threat of imminent foreclosure because of lost incomes, the inability to secure credit, and a challenging job market. According to the RealtyTrac® US Foreclosure Market Report™, there were 803,489 total foreclosure filings in the first quarter of 2009. This represents a nine percent increase from the previous quarter and 24 percent from the first quarter of 2008.

Combined with research from the AARP Public Policy Institute that found as many as 600,000 seniors are delinquent or in foreclosure, this means that some retirees who felt secure in their retirement plans and finances just a few short years ago are now confronting the possibility of losing their homes.

One alternative for seniors facing foreclosure is a reverse mortgage. A reverse mortgage is a federally insured mortgage product created in 1987 by the Federal Housing Administration that is designed to protect seniors by helping them to recapture the equity they have built up in their homes. A reverse mortgage allows individuals 62 years or older who own their homes and who have built up equity in it, to secure up-front cash, ongoing monthly payouts, or a combination of the two from a lender.

Take for example Lucy Hull, a 69-year-old wheelchair bound widow living with her cat Freckles and her dog Bonnie in Overland Park, Kansas, who had to turn her porch lights off on Halloween because she couldn't afford to buy candy for the neighborhood children. Even though she had carefully planned for her retirement, mounting economic pressure was forcing her further and further behind in her bills and she had just received a foreclosure notice. With the help of Golden Gateway Financial, a financial resource for seniors, Hull was able to negotiate a short sale on her forward mortgage and preserve her home while extracting extra cash for daily living expenses.

"It gave me peace of mind," Hull said. "I plan on staying here until I die."

Hull's story is not uncommon. According to the National Council on Aging, by the year 2030, retirees will be $45 billion short of the income needed to meet basic food, shelter and medical needs. Unfortunately, many seniors in situations similar to Hull are simply unaware that there are compelling financing options available to them.

"Even though the economy as a whole might be seeing the light at the end of the tunnel, many seniors are still in real danger of losing the home they've likely lived in most of their lives," said Eric Bachman, founder and CEO of Golden Gateway Financial.

A monthly payout from a reverse mortgage can substantially augment Social Security payments. For those considering a reverse mortgage, the only stipulations are that the owner remains in their home and that they maintain the property (including insurance, property taxes, and critical repairs). The loan does not depend on a credit evaluation.

Another option for those in danger of losing their home is to raise money through a life settlement. Life settlement is the practice of selling an unneeded life insurance policy for cash. This practice was originally most often used by the wealthy, but it has now grown in popularity and is more widely available as a mainstream financial tool. As part of a life settlement, an investor offers a lump sum cash payment to a policyholder in exchange for assuming ownership of the policy and the payment of premiums. On average, life settlements provide 300 percent of the cash surrender value of a policy(1).

Older Americans in need of cash or those simply looking to augment their current income should carefully research reverse mortgages or life settlement. Sites like Golden Gateway Financial are useful resources because tools such as their award-winning online reverse mortgage calculator and informative life settlement calculator can help seniors assess their financial health and then privately compare and choose the right solutions for their unique situation. Golden Gateway Financial also offers dedicated experts who can explain each product, simplify the research and transaction process, and negotiate with lenders or policy purchasers.

For Hull, and for millions of other senior Americans with a financial burden, a reverse mortgage or life settlement can provide financial security and peace of mind long into what should be the best years of their lives.

About Golden Gateway Financial

Golden Gateway Financial (http://www.goldengateway.com), located in Oakland, California, is a comprehensive resource for senior citizens, baby boomers and soon-to-be retirees to assess their financial health at retirement. Through a unique set of online tools and clear and unbiased communication, the company helps individuals address "The Great American Retirement Dilemma." The tools enable users to better assess the security of their nest egg and to make intelligent choices to fully enjoy what should be the best years of their lives. The company also operates the industry's premiere reverse mortgage and life settlement services with award winning calculators and products for each, and a team of trained counselors to help seniors better understand the products and evaluate whether they are right for them.

(1) Data Collection Report 2006, Life Insurance Settlement Association (LISA)

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