The phenomenon of “gray divorce,” where couples aged 50 and older decide to part ways, is on the rise. A 2022 study published in the Journals of Gerontology reveals that the divorce rate in this age group has doubled since 1990, and tripled for those aged 65 or older.
Gray divorce presents numerous financial challenges as couples work to separate their intertwined finances. Housing is a major concern, but a recent column in Success magazine suggests that reverse mortgages might offer a viable solution.
Nancy Hetrick, founder and CEO of Smarter Divorce Solutions and a divorce financial analyst, discussed how reverse mortgages can benefit separating couples who qualify for such loans.
In her interview, Hetrick emphasized that reverse mortgages are now “fully regulated and insured and are no longer the scam vehicles they were in the ‘80s.” The Home Equity Conversion Mortgage (HECM) program, established by legislation in 1988, saw its first loan issued the following year.
“It’s just a really wonderful piece of flexibility and creativity for these couples,” Hetrick stated. She suggested that the spouse leaving the marital home could consider a HECM for Purchase (H4P) loan, leveraging the equity they have built up. However, she noted that remaining in the family home might not be ideal due to the limitations that aging can bring.
“Maybe this is actually an opportunity for both of them to kind of reimagine the last phase of their lives,” she added.
Earlier this year, Steve Resch, Vice President of Retirement Strategies at Finance of America (FOA), spoke to HousingWire’s Reverse Mortgage Daily (RMD) about the increasing prevalence of gray divorce among financial planners’ clientele.
“Another opportunity is the H4P,” Resch noted 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.”
He explained that many people who moved to Florida often return to be near family after a spouse passes away. “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,” Resch concluded.
