Generation Mortgage Co., an Atlanta-based company specializing solely in providing reverse mortgages, has formed a set of policies and procedures that apply to purchases of other financial products using reverse mortgage proceeds.
Under the guidelines, products that are designed for long-term wealth accumulation for younger adults and that impose surrender or withdrawal charges, are considered unsuitable for reverse mortgage borrowers and seniors in general. Examples of such products include both fixed and variable deferred annuities with surrender charges and long-term bank certificates of deposit with early withdrawal penalties, the company explains.
Products that remain potentially suitable under Generation's policies are those that address the needs and risks that seniors face, such as provisions for lifetime income and long-term care needs. Immediate annuities and long-term care insurance, properly designed and purchased, address these needs and risks and remain suitable choices for some seniors, according to the company.
Generation plans to strongly counsel against purchase of unsuitable products with funds from any source, including reverse mortgage proceeds. The company will provide each prospective borrower its policy on unsuitable products in writing.