{"id":59645,"date":"2025-04-11T03:00:12","date_gmt":"2025-04-11T01:00:12","guid":{"rendered":"https:\/\/housesmarketplace.com\/wade-pfau-how-market-volatility-could-renew-reverse-mortgage-discussions\/"},"modified":"2025-04-11T03:00:12","modified_gmt":"2025-04-11T01:00:12","slug":"wade-pfau-how-market-volatility-could-renew-reverse-mortgage-discussions","status":"publish","type":"post","link":"https:\/\/housesmarketplace.trio-tv.com\/ru\/wade-pfau-how-market-volatility-could-renew-reverse-mortgage-discussions\/","title":{"rendered":"\u0423\u044d\u0439\u0434 \u041f\u0444\u0430\u0443: \u043a\u0430\u043a \u0432\u043e\u043b\u0430\u0442\u0438\u043b\u044c\u043d\u043e\u0441\u0442\u044c \u0440\u044b\u043d\u043a\u0430 \u043c\u043e\u0436\u0435\u0442 \u0432\u043e\u0437\u043e\u0431\u043d\u043e\u0432\u0438\u0442\u044c \u0434\u0438\u0441\u043a\u0443\u0441\u0441\u0438\u0438 \u043e\u0431 \u043e\u0431\u0440\u0430\u0442\u043d\u043e\u0439 \u0438\u043f\u043e\u0442\u0435\u043a\u0435"},"content":{"rendered":"
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Reverse mortgage professionals have long sought financial advisors<\/a> as referral sources, but might find that those professionals are not particularly willing to entertain the notion<\/a> that the product would be right for their clients. But when confronted with volatility in the markets, advisors who are more concerned with the risk of loss might start to slowly open themselves up to more conversations.<\/p>\n

Wade Pfau<\/a>, professor of retirement income at the American College of Financial Services<\/strong><\/a>, has spoken academically on the topic of reverse mortgages as part of a retirement plan, including in dedicated books and with HousingWire<\/strong>\u2019s Reverse Mortgage Daily (RMD) on multiple occasions.<\/p>\n

Recent market volatility and the HECM line of credit<\/h2>\n

Pfau sat down with RMD to talk about the recent market volatility<\/a> brought on by wider discussions about tariffs<\/a>, which sent the market into a tailspin earlier this week. While most of the broader tariffs have since been delayed by at least 90 days<\/a>, they\u2019re not all lifted and the market reacted tepidly in active trading on Thursday.<\/p>\n

\"\"
Wade Pfau<\/figcaption><\/figure>\n

But volatility is always a chief concern for financial advisors, and when asked how this latest bout might compare to the initial market response to the early days of the COVID-19 pandemic, Pfau said it was still a little too early to say definitively. But any onset of volatility will provoke a response.<\/p>\n

\u201cIt\u2019s always a matter of if you\u2019re retired, and suddenly the market\u2019s had this pullback and you need to take some distributions to meet expenses, being able to tap into something that\u2019s not exposed to that volatility can be really helpful to manage your long term investment performance,\u201d he explained. \u201cSo that was the original justification for the [Home Equity Conversion Mortgage (HECM<\/a>)] portfolio coordination strategy. And indeed, I think it still makes as much sense today as at any point, nothing\u2019s really changed in that regard.\u201d<\/p>\n

In the early days of the pandemic, Pfau spoke to multiple outlets, including RMD<\/a>, about the use of a reverse mortgage as a \u201cbuffer asset.\u201d When the market drops, someone with a standby HECM line of credit can tap that resource until the market stabilizes, and then resume tapping investments at that point.<\/p>\n

\u201cI looked at just a simple rule that when you retire, just record the value of your investment assets,\u201d Pfau said this week. \u201cAnd then moving forward from that point, if the current value of your investment assets is less than where you started, that would be the time to tap into the HECM.\u201d<\/p>\n

HECM benefits more visible for 2025 retirees<\/h2>\n

The solid market performance observed in 2023 and 2024 might delay, for some retirees, the necessity to tap their HECM line of credit at the immediate onset of a volatility bout, he explained. That could\u2019ve been particularly true for recent retirees, but for those who may have entered retirement at the start of 2025, then someone in that situation may have more quickly reached a point where tapping a HECM made sense.<\/p>\n

\u201cIn this kind of interest rate environment, you\u2019re looking at probably around 40% of the home value, up to the lending limit as an initial line of credit principal limit,\u201d he said. \u201cIf you have a home that has any value to it, that\u2019s surely going to be enough to cover \u2014 as long as you\u2019re not too profligate of a spender \u2014 a couple years\u2019 worth of expenses.\u201d<\/p>\n

Not all of that would be taken out at once, but the amount would likely be enough to cover a period of volatility. In this case, it certainly would have been given that a sense of stability returned to the market once the tariff delay for most countries was announced earlier this week.<\/p>\n

But that\u2019s far from the only tool in the toolkit, Pfau said.<\/p>\n

\u201cPart of the reaction to this kind of market environment, too, is that you just cut back on your spending a little bit,\u201d he said. \u201cBut to the extent that you need to take distributions to meet your expenses, open the line of credit on the HECM and tap into that as an alternative to distributing from your portfolio at this point.\u201d<\/p>\n

<\/h2>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Reverse mortgage professionals have long sought financial advisors as referral sources, but might find that those professionals are not particularly willing to entertain the notion that the product would be right for their clients. 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