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Clear & concise in all communications

Always act in the best interest of our clients

NAOSA Gold Standards of Professional PracticeTM

Each member profession of the National Association of Senior Advocates has a standard of guidelines that our members must abide. We call these the Gold Standards of Professional Practice.
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All members of NAOSA agree to always act in a client’s best interest. Over and above all state, federal and specific industry rules and regulations, all work will be performed with the goal of maximizing the benefit to the client, rather than maximizing the profit of our Professional Members.

Additionally, each Professional Member of the National Association of Senior Advocates must follow and act in accordance with a Standard of Guidelines. We call these theNAOSA Gold Standards of Professional Practice. ™

The NAOSA Gold Standards have been created by professionals in their specific fields. The NAOSA Gold Standards strive to eliminate any gray areas that may exist in various business practices. Although these gray areas may be legal in many cases, NAOSA experts agree that they generally do not serve the best interest of the consumer.

The NAOSA Gold Standards of Professional Practice™ also strive to offer transparency in various professions, and aim to educate consumers on the various business models of these professions. Consumers must have information to make an educated decision when considering a specific product or service.

Members who are found not in compliance with these standards will be censured, with membership revoked immediately.

Click on each industry to find out more.

Auto and Home Owners Insurance
Insurance and Investments
Real Estate
Legal Professionals
Senior Housing Brokers
Long-Term Care Insurance
Home Care
/ Assistance
Reverse
Mortgage

Auto Insurance

Auto and Home Owners Insurance

The National Association of Senior Advocates member professionals have identified two business practices in the auto insurance industry that make up our Gold Standards of Professional Practice. All members of NAOSA agree to the following:

1. Policy Replacement: Some insurance agents will not quote similar coverage when attempting to replace a competitor’s policy. Instead, the agents will suggest less coverage in multiple areas, which will have the obvious effect of a lower premium. In many situations, the current policy that is the target for replacement is no more expensive than the replacement policy if the agent performed an “apples to apples” comparison. Therefore, when comparing policies for potential replacement, all comparisons will be made utilizing a “line-by-line” comparison method. Comparison quotes will be for the exact amount of coverage currently in force. Only after such comparison may recommendations be made for decreasing or increasing current coverage.

2. Quoting State Coverage Minimum Auto Insurance: At times, unethical agents will quote the minimum coverage required by the state in order to win business. In reality, the vast majority of drivers will be required to carry coverage over and above these minimums. This is a classic “bait and switch” scenario. At no time will a NAOSA member utilize this tactic by quoting state minimum coverage unless specifically asked to do so by the customer.

We welcome your input. If you are a professional and have any constructive comments or suggestions on the NAOSA Gold Standards, please send us an email to info@NAOSA.ORG

Insurance and investment brokers

Insurance and Investments

The basic premise for the NAOSA Gold Standards of Professional Practice for investment brokers and life insurance agents/brokers is the requirement to be clear & concise in all communications and to always offer the best product at the lowest cost to the client. Although brokers and agents are obligated to ethics rules by the federal and state governments as well as member associations, there are still many gray areas that have not been addressed.

As stated above, when recommending similar products, policies, annuities or investments, a member of NAOSA will offer the product and solution that is the lowest cost to the client. A similar product is defined as one that has: the same guarantees, similar historical rate of return and/or similar objective.

In addition to ethics requirements already in place, the National Association of Senior Advocates member professionals have identified several business practices and/or products that require more clarification or elimination. With the goal of always working in a client’s best interest, all investment brokers and insurance agents/brokers agree to the following:

1. Annuities:
When selling annuities with a surrender period of over 7 years, agents will perform a thorough cost analysis with annuities with similar investment objectives and featuring surrender periods of seven (7) years and under. The member agent will recommend the annuity with maximum NET rate of return. Policy interest rate projections will utilize a similar rate of return when comparing annuities with a similar underlying investment.

NAOSA members will be particularly vigilant when selling “bonus annuities”, an annuity offering an upfront interest rate bonus to the client. At times, a bonus annuity will have higher internal expenses, with the final outcome being an equivalent or lower NET rate of return even after the bonus money is applied. In such cases, the agent will recommend the higher NET rate of return annuity, regardless of the upfront bonus.

Percent of Assets Invested: Other than annuities with the sole objective of guaranteed income, agents will not advise a client to invest more than 50% of investable assets in an annuity.
Replacement of Annuities within the Surrender Charge Period: Agents will not replace one annuity for another investment within an annuity’s surrender period unless the client has an emergency that requires a withdrawal and has exhausted all other options within their portfolio.

Replacement of Annuities outside the Surrender Charge Period: Agents will not replace one annuity for another annuity outside of an annuity’s surrender period unless the client’s investment strategy has changed or the guaranteed NET rate of return on the replacement annuity is demonstrably higher.

Indexed Annuities: Agents will provide full disclosure on indexed annuities. Clients must have a clear understanding in writing of the difference between Cash Value, Cash Surrender Value and The Protected or Guaranteed Value. When discussing the guaranteed growth rates, it must be disclosed that the guarantee only increases the amount available for income. The overall underlying value of the investment will only grow according to how it is invested. The client must have a clear understanding that the primary objective of indexed annuities is guaranteed income, not overall cash value available for lump sum withdrawal or to pass on to heirs. The client must also have a clear understanding of the affect withdrawals or an income stream will have on the overall cash value.

2. Investments:
An agent will not switch a client’s mutual fund from an A share fund to a C share fund unless the total management cost to client will decrease or the client’s investment objective has changed.

An agent will clearly explain their compensation structure. Agents will not state an investment is “no-cost” when offering C shares or no-load funds that are subject to an advisory fee.

3. Life Insurance:
Agents will recommend life insurance on a needs basis and will recommend need over policy type. With the exception of Final Expense Policies, NAOSA members will never sell a permanent policy for a short term need.

Low or moderate income families will not be recommended a permanent policy if the policy does not cover the insured’s total needs, i.e. income replacement, mortgage pay-off, education, etc.

If the NAOSA member professional is also acting as a financial planner or investment advisor, the member professional will review all investment goals and advise accordingly. If a client has goals that would be better suited through products other than permanent life insurance, the NAOSA member professional will recommend the appropriate product.

Policy Replacement: With the exception of the following, agents will not replace an existing whole life or universal life policy for a new policy:

  • The client has a clear and stated need for more insurance and/or the agent can clearly demonstrate an insurance cost savings (as opposed to premium cost savings) with the replacement policy.
  • The client has an underfunded Universal Life policy (the policy will lapse under current premiums) and the proposed replacement policy has a lower or equivalent cost while providing guaranteed coverage.
  • The client has a long-term care (LTC) need and the proposed policy can pay for LTC by way of an accelerated death benefit and/or extension of benefits rider. This exception only applies under the following circumstances:
    • There is a stated need for long-term insurance and the replacement policy has a guaranteed premium and death benefit. In addition, the following conditions must be met:
    • The premium and benefits associated with the accelerated death benefit chronic illness rider (101g), LTC rider (7702b) or
      LTC extension of benefits rider must be guaranteed.
    • If a 101g chronic illness rider is proposed, a compensable chronic illness must not require the condition to be
      permanent
    • The client cannot obtain an individual LTC policy due to lack of additional funds or lack of insurability and/or the client
      is reluctant to buy a LTC policy, with non-guaranteed premiums, that may never be needed (i.e. long term care may never be
      needed in one’s lifetime, but life insurance will eventually pay a death benefit).

We welcome your input. If you are a professional and have any constructive comments or suggestions on the NAOSA Gold Standards, please send us an email to info@NAOSA.ORG

Real Estate

The basic premise for the NAOSA Gold Standard of Professional Practice in the real estate profession is the requirement to be clear & concise in all communications and to avoid conflicts of interest. Although real estate agents are obligated to ethics rules by the state and members associations, there are still many gray areas that have not been addressed.

In addition to ethics requirements already in place, the National Association of Senior Advocates member professionals have identified several business practices that require more clarification or elimination in real estate transactions. With the goal of always working in a client’s best interest, all real estate agents agree to the following:

1. Pocket Listing or Quiet Listing: At no point and time will an agent suggest a “pocket listing”, sometimes referred to as a “quiet listing”, unless the intent of the client is to privately sell their house. Pocket listings occur when an agent does not list a house on the MLS. Instead, agents will only notify their own prospective buyer and/or a close network of other agents.

The reason to avoid pocket listings is that in many cases a pocket listing will result in a lower sale amount for a home due to the lack of exposure to the general public. A client may still choose a pocket listing if the primary goal is privacy or a “no-hassle” sale. The client must sign and initial this form if the client chooses a pocket listing. The “MLS Opt-Out” form or version thereof is insufficient and is not an acceptable disclosure.

2. Team Selling: All agencies that represent themselves as a team, backed by a prominent agent, will clearly disclose, in writing, which agent will be the lead agent in the sales process.

3. Real estate agents will not mislead clients regarding: Experience or ranking among other agents in the area, such as claiming to be a "top agent" or "No. 1 agent" in the area; representing number of listings; representing area of specialty and/or ability to sell a house for a greater value due to their experience.

4. Listing an Overpriced Property: While agents usually urge sellers to price at market value or lower, some agents will not challenge sellers who insist on asking too much for their homes. Some agents use overpriced homes as buyer magnets as it provides an opportunity to pick up unrepresented buyers. Agents may also accept a listing at a higher price, knowing that they will advise the client to reduce the listing price within several weeks. Agents may only accept such listings after the seller is educated on the risks of listing an overpriced property and demands a listing at the higher price.

5. Steering: At no time will a NAOSA member steer a client to a certain listing. Steering can occur in many instances:

  • Buyers’ agents will steer clients towards properties that offer higher commissions.
  • Agents will not steer clients to a particular real estate agency in the hopes of dominating a market and/or blackballing listings from other agencies.
  • Buyer's agents will at times show only their own listings, or company's own listings, hoping to maximize commission.
  • Buyer's agents will at times not show clients homes listed by certain brokerage companies based on reputation or past experiences.

6. Buyer's agents will always show a property regardless of commission: Some real estate agents will not show homes with less than customary commissions. NAOSA member Agents will show all properties of interest to their clients, regardless of the commission. If the commission is less than the buyer broker agreement stipulates, the agent will explain the ramifications and contractual obligations to the buyer before showing the property.
7. Agents will not:

  • Underprice homes for quick sale, unless requested by seller.
  • Accept referral fees and/ or gifts from the service providers.
  • Allow their clients to pay hidden fees at time of settlement.
  • Tell a buyer that there are other buyers interested or other offers pending on the property if untrue

8. Will always report a predatory lending situation.

We welcome your input. If you are a professional and have any constructive comments or suggestions on the NAOSA Gold Standards, please send us an email to info@NAOSA.ORG

Legal Professionals

The basic premise for the NAOSA Gold Standards of Professional Practice in the legal profession is the requirement to be clear and concise in all billing. Although legally obligated to bill correctly and not overcharge, many times legal professionals will bill for services that are unexpected by the client. This is not to imply that the professional is acting unethically. Many times, a client will agree to certain work and, later, request additional services without fully understanding that this will increase the total cost.

To avoid confusion and unexpected charges, all legal professionals who are members of NAOSA agree to the following:

1. Fixed prices or accurate price ranges for requested work pertaining to wills and trusts. All work will be quoted prior to engagement agreement between the Client and Legal Professional If an exact amount cannot be given, then a minimum and maximum will be quoted. A clear written explanation will be given as to what would impact costs of work on the maximum end of the quote spectrum.

2. If at any time a Client requests additional work to be performed that is outside of the scope of the original work request, a new estimate will be given in writing and advanced client notification is required. For example, if a Client’s original request is a will or trust and then the Client requests advice on a matter unrelated to wills and trusts, the legal professional will communicate to the client the fact that there will be additional charges relating to the additional work.

We welcome your input. If you are a professional and have any constructive comments or suggestions on the NAOSA Gold Standards, please send us an email to info@NAOSA.ORG

Senior Housing Brokers

The basic premise for the NAOSA Gold Standards of Professional Practice in Senior Housing Placement is full disclosure as to how the placement company or individual is compensated in addition to the requirement that all senior housing representatives must meet with each client to assess needs. With the exception of government agencies, there are two financial models under which senior housing placement agencies operate:

1. Fee based Agencies:These agencies may include geriatric case managers, an attorney or other company specializing in senior housing. These agencies charge a fee directly to the client for services rendered.

2. “No-Cost” Agencies: The vast majority of nationally known companies specializing in senior housing placement are compensated by the actual retirement community, assisted living community or skilled nursing center. In general, these companies do not charge the client. Instead, they operate as a broker for these communities.

Which Agency Model is Better? It is up to the consumer to choose which is a better option. If you choose a "no-cost" agency, the consumer must understand that the agency does not represent all options in the area. With the exception of NAOSA Members, these agencies may not refer a client to a community that does not offer compensation. On the other hand, the consumer should not assume that the "fee-based" companies, those that charge the client directly, have expertise in all options and communities in the area.

Gold Standards: To assist seniors in knowing that their best interest is first and foremost, NAOSA has three Gold Standards for Senior Housing Brokers:

1. All agents of senior placement agencies must meet with each client before making recommendations.

2. The agency will provide full disclosure on how the company or individual is compensated.

3. All Senior Placement Members of NAOSA agree to always act in the best interest of their clients. Most importantly, if a client has a specific need or desire that a NAOSA Member agency cannot fulfill, the Member agency will immediately disclose this fact and refer the client to the appropriate resource.

We welcome your input. If you are a professional and have any constructive comments or suggestions on the NAOSA Gold Standards, please send us an email to info@NAOSA.ORG

The Trades

The Trades

The basic premise for the NAOSA Gold Standard of Professional Practice™ in the Trades is the requirement to be clear and concise in all quotes and to perform all services as agreed upon within the promised timeframe. Equally important is clear communication between the client and the NAOSA Trade Professional regarding expectations of the work to be completed. Many conflicts arise due to lack of communication regarding details of work expectations, the NAOSA Gold Standards assist both parties in establishing these expectations.
Special Note: The number one way consumers can prevent fraud or unethical businesses practices in the trades is to have already interviewed a contractor prior to any work needed. Experts also recommend interviewing more than one professional. Consumers are particularity vulnerable in emergencies. It is best to have an established relationship with a tradesperson before any actual service is required. This simple step as well as working with a NAOSA Member Professional will go a long way in ensuring you are dealing with an ethical tradesperson.

Gold Standards of Professional Practice:

1: Licensed and Insured: All NAOSA Member Professionals will be licensed and insured. NAOSA members will offer to show identification, a state license and proof of current insurance when requested.

2: Clear Communication of Work to be Completed: All components of the job will be clearly communicated in writing prior to work beginning. This is a common challenge with both the homeowner and the tradesperson. When details of the job are vague, issues are bound to arise. With the goal of preventing miscommunication, all NAOSA members will clearly detail, in writing, the full scope of the work to be performed.

3: Accurate Quotes: All work to be done will be quoted accurately. Work will not be underbid with expectation of additional payment once work has begun.

Be on the look-out for companies that underbid or use inferior products. This is a common practice among unethical tradespeople. This typical “bait and switch” tactic can win a low ball contractor the job, but there is usually an extra charge during the project or expected work not included.

NAOSA members are not in the business of underbidding. Instead, NAOSA members pledge to deliver high quality work for a fair price. This means that NAOSA members may not be the lowest bid for your work. But, you can rest assured, the work will be delivered as promised at the agreed price.

4: Quotes Will Include All Parts and Materials: Another tactic utilized by unethical tradespeople is quoting a certain part or brand and then substituting an inferior part. By specifically naming parts and materials in the initial quote, NAOSA member professionals will ensure the consumer is getting exactly the item for which they paid.

5: Completion Date of Job will be Provided in Writing: All work will be done within the specified timeframe. If work is not performed as agreed in writing, the client may cancel the agreement and withhold any further payment. A job is not considered late in cases where the client requests additional work to be done mid-project, commonly referred to as a change order. Change orders cause both time delays and increased costs. A job also will not be considered late in cases where undisclosed issues or an issue that would be unknown to both parties appear in the home or other place of work being performed (Inclement weather, previous structural damage, faulty wiring, faulty plumbing, etc.)

6: Full Payment for Work will not be Made Until All is Work is Done Completely and Correctly: NAOSA members will not require full payment until the job is complete. This Gold Standard does not apply to change orders or unknown issues where applicable as outlined in Gold Standard #5 above.

7: A Written Receipt will be Given at Time of Payment: A receipt is important in case something goes wrong and also for possible tax deductions. This is especially important with cash payments. NAOSA Member Professionals will always provide a written receipt.

8: Will not Mark-up Prices in Affluent Neighborhoods: This is a common practice in many trades. NAOSA members do not engage in this business practice and will charge the same price regardless of the neighborhood.

We welcome your input. If you are a professional and have any constructive comments or suggestions on the NAOSA Gold Standards, please send us an email to info@NAOSA.ORG

Long-Term Care Insurance

Long-Term Care Insurance

The basic premise for the NAOSA Gold Standards of Professional Practice for Long Term Care Insurance is the requirement that NAOSA Members conduct an in-depth analysis and comprehensive approach to solution development. Although brokers and agents are obligated to ethics rules by the federal and state governments as well as member associations, there are still many gray areas that have not been addressed.

In addition to ethics requirements already in place, the National Association of Senior Advocates member professionals have identified several business practices and/or products that require more clarification or elimination. With the goal of always working in a client’s best interest, all NAOSA Members agree to the following:

1: Policy Replacement: Policy Replacement is rarely appropriate, even with an older policy facing a rate increase. Even at the higher premiums, the old policy is probably a good value and worth keeping.

Why retain your current policy?

  • Older policies facing rate increases may have lifetime benefits and 5% inflation coverage. These benefits are generally not available in today’s policies.
  • Benefits in older policies may be reduced to lower premiums, while still maintaining meaningful coverage. This is important if the older policy contains benefits such as those described above that may not be available with a replacement policy.

Replacement is only warranted if the clients insists in writing that they want a hybrid or linked-benefit product. These products typically offer guaranteed premiums and a death benefit if long-term care is never needed. If these features aren’t important to the client, a NAOSA Member may not replace the policy.

2: Type of Policy: There are multiple types of policies that may be used to transfer the long-term care risk. Some combine life insurance and long term care insurance, others combine annuities and long term care insurance and there are stand-alone long term care policies as well.

Type of Policy Continued:

There is no one best policy type. Consideration must be given to age(s), couple status, income and assets, health histories, source(s) of funds to pay premiums, preferences, multiple insurance needs and state approvals of policies/riders. All members of NAOSA will have a full understanding of the client’s situation and needs and will not sell a policy that fails to meet them.

3: Price Quotes: Unethical or unknowledgeable agents will generally quote the best possible rate to gain a client’s attention. If a client has an unfavorable health history, the final rate offered by the insurer generally will not be the insurance company’s best rate as quoted. Unfortunately, the client is likely to accept a higher rate as opposed to starting the process over again with another agent. This is a typical “bait and switch” tactic and is unacceptable to NAOSA Members. All members of NAOSA will ask appropriate questions regarding client health history and obtain underwriting predeterminations before presenting policy illustrations. A higher rate may still be possible after underwriting discloses unknown or undisclosed issues, but obtaining underwriting predeterminations will give the client the best estimate prior to application.

4: Minimum Asset Requirement: In general, individuals with limited savings and income are not appropriate candidates for long-term care insurance. However, such a client may still feel some insurance is better than no insurance. Therefore, when recommending traditional long-term care insurance for those with fewer assets, state partnership qualified policies should be presented. Partnership qualified policies permit the client to retain assets equal to the policy benefits when qualifying for Medicaid.

5: Presenting Multiple Carriers: Due to the fact that there are fewer insurance companies selling traditional Long Term Care Insurance today, it is extremely important to know one’s options. Generally, a prospective client should be educated on the options available as well as the differences between insurance company offerings.

NAOSA highly recommends that once all options are considered and a plan design “standard” is determined, clients should be presented with illustrations from multiple companies. In some cases, an agent may be what is known as a “captive agent”, a term used for an agent working for a single company. Although usually incentivized not to, many captive agents may still present multiple insurance carrier options. NAOSA recommends that the consumer ask for more than one option. If the agent refuses or cannot, NAOSA recommends a second opinion from another agent.

We welcome your input. If you are a professional and have any constructive comments or suggestions on the NAOSA Gold Standards, please send us an email to info@NAOSA.ORG

Home care

Home Care/Assistance (Custodial/Non-Medical Only)

All members of NAOSA agree to always act in a client’s best interest. Over and above all state, federal and specific industry rules and regulations, all work will be performed with the goal of maximizing the benefit to the client, rather than maximizing the profit of our Professional Members.

The NAOSA Gold Standards have been created by professionals in their specific fields. The NAOSA Gold Standards strive to eliminate any gray areas that may exist in various business practices. Although these gray areas may be legal in many cases, NAOSA experts agree that they generally do not serve the best interest of the consumer. Members who are found not in compliance with these standards will be censured, with membership revoked immediately.

The basic premise for the NAOSA Gold Standard of Professional Practice™ in Home Care and Assistance is to establish best practices that will improve the safety and well-being of the consumer, prevent fraud and set guidelines to providing outstanding customer service. These guidelines are not meant to cover medical based assistance. Please refer to your State’s Department of Aging for helpful information regarding medical based home care.

Gold Standards of Professional Practice:

1. Licensed, Bonded and Insured: All NAOSA member companies will be licensed, bonded and insured. A copy of all the above will be made available to all potential and current clients.

2. Background Check: All caregivers are required to have a state criminal history records check or a private agency background check to ensure safety and to help minimize the risk of illegal activity.

3. Employee Screening: All caregivers must be screened prior to hire. Screening includes a 10 bar drug test, health screening, complete I-9 forms and verify the caregiver’s ability to work in the United States. Drug tests are not mandatory in many states; however, it is a requirement for NAOSA membership.

4. CPR Certification: All caregivers must have a current certification in CPR

5. Reference Check: All agencies are required to perform a reference check of a caregiver prior to hire.

6. Agency Assumption of Liability: Agencies will assume risk for actions on behalf of employees and caregivers with both professional liability insurance and general liability insurance. Employment status of caregivers of agencies may either be an actual employee of the company or an independent contractor. If a caregiver is an independent contractor, the home care company may not be liable for negligence caused by the caregiver, making it extremely difficult for one to recover damages if harmed. Therefore, all NAOSA member companies will assume liability for actions on behalf of caregivers regardless of employee status.

Note: This is an important consideration if a consumer decides to hire a caregiver directly as opposed to using an agency. Careful consideration should be made as to the issue of liability and one should fully understand this risk before making this important decision

7. Customer Service on Call 24/7: 24 per day customer service is important if a caregiver fails to show-up at the right time or not show up at all. It is also important for customer service issues and other complaints. All NAOSA members will offer this service.

8. Company Must Interview Caregivers Before Hire: NAOSA member companies must perform an inperson interview of an employee, independent contractor, or contractual employee before the individual is referred to clients.

9. Confidential/No Fault Complaint Policy: Freedom to complain without fear of retaliation from a caregiver is extremely important. At times, clients will be unhappy for a variety of reasons, but feel a complaint could jeopardize quality of future care or even harmful retaliation. Therefore, all NAOSA member companies will offer a clear complaint policy offering anonymity for the client as well as other measures to ensure client safety. Doing so will assist in quality of care and help deliver peace of mind for clients and their families.

10. Assigned Customer Service Representative: When possible, NAOSA members will assign each client a single point of contact. Having a single point of contact will help ensure responsibility is taken as well as minimizes communication issues.

11. Communication of Caregiver Unavailability: Caregivers may call in sick at times and have other issues that prohibit them from going to work that day. NAOSA members will call clients in such cases and send a replacement suitable for the clients’ needs.

Reverse Mortgage

Reverse Mortgage/Home Equity Conversion Mortgage (HECM)

All members of NAOSA agree to always act in a client’s best interest. Over and above all state, federal and specific industry rules and regulations, all work will be performed with the goal of maximizing the benefit to the client, rather than maximizing the profit of our Professional Members.

The NAOSA Gold Standards have been created by professionals in their specific fields. The NAOSA Gold Standards strive to eliminate any gray areas that may exist in various business practices. Although these gray areas may be legal in many cases, NAOSA experts agree that they generally do not serve the best interest of the consumer. Members who are found not in compliance with these standards will be censured, with membership revoked immediately.

The basic premise for the NAOSA Gold Standards of Professional Practice for Reverse Mortgage Brokers is the requirement to be clear & concise in all communications and to work to ensure that a reverse mortgage is only offered when appropriate. Although reverse mortgages have seen increased regulation from both the federal and state governments, there are still many opportunities for a consumer to be taken advantage. In addition to federal and state regulations that may be already in place, the National Association of Senior Advocates member professionals have identified several business practices that require more clarification or elimination.

The goal of the first part of this document is to offer information on the reverse mortgage product and potential uses for a reverse mortgage. The second details the NAOSA Gold Standards of Professional Practice™.

What is a Reverse Mortgage?

A Reverse Mortgage is a loan that allows qualifying homeowners to convert a portion of the equity in their home into cash. A Home Equity Conversion Mortgage (HECM) loan, also known as a Reverse Mortgage, does not become due as long as the borrowers live in the home as their primary residence and continue to meet the obligations of the mortgage, including paying property taxes and insurance on the home.

A HECM loan is a mortgage insured by the Federal Housing Administration (FHA). Loan proceeds can be used to pay medical bills, to finance living expenses, in-home care or any extra cash needed for unexpected expenses. Mortgage payments are not required to be paid out of pocket, instead, home equity is internally paying the mortgage over time. Unless payments are made, the mortgage balance will grow which will diminish available equity at time of home sale. The loan becomes due, and payable, when the last borrower leaves the home.

What are Eligibility Requirements?

Borrowers must be 62 years of age or older, own and reside in the property as your primary residence. Borrowers must continue to live in the home as their primary residence throughout the life of the loan. They must also meet with a HUD certified Reverse Mortgage Counselor prior to applying for a Reverse Mortgage loan.

Additionally, the property must also meet certain eligibility requirements. The property must be a single-family home, a 2-4unit owner occupied house, a HUD-approved condominium or a manufactured home that meets FHA requirements. With a HECM, the borrower is required to pay an initial Mortgage Insurance Premium (MIP) 2.0% of Max Claim Amount (appraised value up the HUD loan limit), as well as an annual MIP of 0.5 percent (current rate effective October, 2017). The borrower must also pay title insurance, state and county recordation tax and other closing costs, typically found in any mortgage transaction. In some cases, an origination fee may be charged. This is something to consider when comparing lenders.

Why would someone consider getting a Reverse Mortgage?

When used correctly, a Reverse Mortgage can be a useful tool when planning for retirement income and can be a part of the larger retirement income planning conversation with your financial planner or other trusted financial advisor. As part of overall retirement income planning, a Reverse Mortgage can be useful tool to address or resolve many of the Major Concerns of Income Planning.

1. Longevity Concern: Will I Have Enough Savings to Meet My Basic Living Expenses?
This goal focuses on the lifetime survival of clients’ savings to meet essential living requirements, e.g., housing and basic living expenses. According to a 2016 survey, the number one concern of retirees is how not to run out of savings.

Clearly, there are many things that can erode a nest egg including market fluctuation, sequence risks, inflation, excessive withdrawals, unexpected expenses, etc. The bottom line remains: running out of money and not being a burden to family is still atop of every retiree’s mind.

2. Lifestyle Concern: Will I Have Enough Money to Enjoy Retirement on My Terms?
Used correctly, a HECM may be a good tool to maintain your desired overall standard of living and not be forced to make drastic lifestyle changes. These lifestyle components tend to be more discretionary in nature. Clients must keep in mind that these expenses may need to be scaled back at certain points in retirement.

3. Liquidity Concern: Will I Have Access to Tax-Advantaged Money When I Need It?
Maintaining additional assets that can be tapped quickly to provide funds for unexpected contingencies is critical in retirement. Ideally, these reserves should be accessible with as little taxable or opportunity-loss impact as possible.

A HECM may also be a good tool to assist in maintaining desired income in down markets. Many financial professionals are now recommending utilizing a HECM in lieu of selling assets when the market is down. This strategy allows you to maintain your income and avoid “selling low.” Speak to your financial planner for more information on the possible advantages.

4. Long-Term Care Concern: Am I financially prepared for the costs of health-related expenses?
A couple retiring this year (2017) will need an estimated $275,000 to cover out of pocket health care costs in retirement, according to a recent Fidelity study. That’s a 6% increase over last year’s estimates and significantly more than 2014. This estimate applies to those with traditional Medicare insurance coverage and considers premiums, copayments, deductibles, and out-of-pocket drug costs. It does not consider the cost of a nursing home or long-term care clients may need; that alone is estimated to be an additional $130,000. If you are planning on staying in your home, a HECM could be a useful tool to pay for these expenses. If you are planning on moving to a retirement community, you may need your home equity to buy-in to a community. This is an important consideration before withdrawing funds.

Where should I go to get a Reverse Mortgage?

There are many places these loans can be obtained. NAOSA recommends finding a lender who is local, experienced, and specialized (only does Reverse Mortgages).

Who should I talk to before I get a Reverse Mortgage?

Homeowners should certainly speak to family members, if they are accustomed to seeking input. This is especially true if the clients’ heirs are planning to inherit the home. Homeowners should also consult their financial planner if they have one. All Reverse Mortgages require by law that the client speak to an independent, third-party HUD certified Reverse Mortgage counselor before beginning the Application.

Should I shop around for the best price?

Price is an important component, but be sure to work with an experienced competent advisor. Pricing for Reverse Mortgages should not be dramatically different from one lender to the next, but always check. NAOSA recommends a local, experienced, and specialized lender. Stay away from companies that use high pressure sales tactics. If you are feeling pressured, end all conversations immediately.

How would I know if the lender is suggesting the right type of Reverse Mortgage for me?

The program should fit and assist in solving the concerns mentioned earlier in this document. You should not be told to withdraw more funds up front than you need, but encouraged to allow these funds to remain in the line of credit.Any lender who encourages you to take a large, unneeded cash withdrawal is not acting in your best interest.

Gold Standards of Professional Practice™
1: Unneeded Cash Withdrawal: You should not be told to withdraw more funds up front than you need, but encouraged to allow these funds to remain in the line of credit. FHA has set maximum withdrawals to
help protect borrowers. Even so, do not take a large, unneeded cash withdrawal. Any lender who encourages you to do so is not acting in your best interest. Client initial here_________

2: Consult with a Trusted Individual: NAOSA advises all consumers to consult with a trusted professional with knowledge of your financial situation and goals when considering a reverse mortgage. If a consumer
does not have one, you can find an NAOSA financial planner or similar professional to consult. You may also want to include a close relative or trusted friend in the process of obtaining a reverse mortgage. Client initial here_________

3: No Compensation to Third Parties: A NAOSA member may not compensate a third party, such as a financial planner or other professional, for approval or recommendations of a HECM. This allows for an impartial opinion on suitability.

4: Unneeded Home Improvements: NAOSA members may not suggest using a HECM for unneeded home improvements. Client initial here_________

5: Purchase of Other Investments: An NAOSA member may not suggest to purchase an annuity or other investment with HECM proceeds. Client initial here_________

6: Disabled or Physically Limited Clients: Although ultimately it is every individual’s right to choose where they want to live, NAOSA members must advise clients of alternative options to remaining in the home if a prospective client is limited physically. Examples of physical limitations are lack of mobility (such as use of a walker), no longer capable of driving or other medical issues. Selling is an option that should be included in the refinancing discussion and the client must be made aware of alternative living arrangements such as senior housing. Client initial here_________

7: Always Remain on the Title of Your Home: You or your spouse must always remain on the title to your home (there are exceptions, such as if a house is part of a trust or part of a life estate). There are also provisions that allow a non-borrowing spouse to stay in the home. However, once the last borrower or nonborrowing spouse leaves the home, the loan is due. There are no prepayment penalties, and you can sell your home anytime. Should anyone state any different, immediately cease speaking with that individual. Client initial here_________

Members Pledge

To Always put a Client’s interest over any self interest.

To provide straight forward, non-biased advice & services on behalf of the Client.

To never engage in the industry specific business practices identified as harmful to the consumer by NAOSA experts and Advisory Board Members. (These practices are listed in a separate document and can also be found on the NAOSA website.)

Members Educate

By being clear and transparent in their pricing and eliminate any gray areas that may exist in various business practices, even if they are considered legal.

By always offering a product or service that best suits the Client’s needs.

By clearly explaining all options so that a client can make the best informed decision about their purchase.

By informing their Clients of all NAOSA Gold Standards so that they are prepared when working with other professionals in an unrelated field.

Members Advocate

By becoming a trusted advisor held to the highest standards possible.

By serving as a resource and voice for all consumers who have been exploited.

By cooperating and working with Government Agencies to protect the best interest of our Senior Population and all other Consumers.

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