Gray Divorce

2. Thomas Mastromatto, Certified Divorce Lending Professional
LENDER’S CORNER
THE GRAY DIVORCE: IS A REVERSE MORTGAGE AN APPROPRIATE TOOL?
It is an unfortunate fact that we are now seeing an increase in divorce by Senior Citizens. Clearly this is an issue that
presents many different challenges to all involved in the dissolution, whether it be the lawyer, the financial professionals,
or other professionals providing advice to the parties. These 60+ divorcing couples do not have many of the traditional
problems associated with a marital dissolution, but there are also new challenges that are presented by this age group.
Some of the new issues to be explored include (but may not be limited to);
 Social Security Issues.
 Pension, Profit Sharing, 401K and/or other retirement accounts.
 Investment Assets of the Parties.
 Tax issues relating to those plans.
 Expected reduction in earned income.
 Shared Liabilities: i.e. Mortgages, Credit Cards, Other Liens
 Maintaining the Marital Residence, or purchasing new marital residence(s).
While these are significant issues, this paper will focus only on the final point. How can the parties maintain the marital
residence (if that is their desire) or how do they qualify for purchasing new separate residences in light of the potential
reduction in income available for servicing a mortgage on those residence(s)?
Although not a panacea, the concept of a reverse mortgage should be considered by the parties and their financial advi-
sors as a potential solution to the long term housing problems about to be encountered by the parties.
At the onset, we need to define what a reverse mortgage is, and then we can discuss how it can be useful to the parties.
In the most simplistic discussion, a Reverse Mortgage provides liquidity to the parties by not requiring monthly Principal
and Interest payments on a mortgage of residential property that is lived in by the parties. More importantly, it is in-
cumbent on the financial professionals to be able to assure their clients about what a Reverse Mortgage is not. Several of
the FAQ’s related to Reverse Mortgages are important to be repeated here.
 The party owns the home until they either die, no longer qualify for the Mortgage, or they decide to sell the
home. The parties are responsible for the payment of the Real Estate Taxes and Insurance on the home, as
well as maintenance of the property.
 Any equity in the property at the date of death, or sale of the property, prior to death, is passed to the owner
(s) or their heirs.
 The entire loan is a non-recourse loan that is insured by the Federal Government. The lender, HUD & FHA
can only look to the net sales proceeds of the property to satisfy the loan repayment.
 If there is a negative equity in the property at the termination of the loan, there is no liability for that nega-
tive equity.
What are the qualifications of the parties for purposes of obtaining the Reverse Mortgage?
 Age qualifications. The youngest person on the title must be 62 or older.
 Currently there are no income or credit qualifications, however HUD has announced plans to implement fi-
nancial assessment and minimums in 2015 or after.
 Must demonstrate the ability to maintain property, to include Insurance and Real Estate Taxes, while resid-
ing in the property.
 Using the Reverse Mortgage in a Divorce Situation.

3. Thomas Mastromatto, Certified Divorce Lending Professional NMLS#145824
LENDER’S CORNER
NMLS #145824
Let’s look at a few scenarios that illustrate how the divorcing parties may be able to benefit from the use of a Re-
verse Mortgage. (In all of our scenarios we have assumed that the youngest of the couple is 62 years old, and we
have assumed a 50/50 marital distribution.)
Scenario 1 – Parties own the home free and clear, and the home is a significant financial assets subject to asset
allocation. One Party wishes to retain the home as part of the marital settlement. Parties have significant other
financial assets but they are not sufficient to fund the marital property settlement. Also, the parties’ income is not
sufficient to qualify for a larger conventional mortgage on the existing property.
Solution – The party wishing to retain the home takes out a mortgage up to 50% of the appraised value of
the property. The cash proceeds can be used to provide additional cash to fund the marital settlement as
well as cash for current expenses and investment. Because there was no mortgage on the property, the an-
nual cost to maintain the property remains the same as before.
Scenario 2 – Parties own the home with a mortgage, all other facts being the same as above.
Solution – The retaining party uses the proceeds to pay off the existing mortgage, as well as to fund the
marital settlement. Because the new mortgage does not have any P&I payments, the monthly cash flow of
continuing ownership of the property will be reduced to the retaining property.
Scenario 3 – Parties agree to sell the home as part of the marital settlement, however, each has a need to pur-
chase a new residential unit, but cannot invade the investment assets for the purchase of the property due to the
fact that those assets are necessary to provide annual living costs and expenses.
Solution – The parties each get a Reverse Mortgage of 50% of the lower of the appraised value or purchase
price of the new residences and they use the proceeds from the sale of the Marital Residence to fund the bal-
ance. No investment assets are invaded so the investment income is stable for the future.
Scenario 4 – Parties agree to sell the home, and each has a need to purchase a new personal residence, but do
not have the continuing post-divorce income to qualify for a conventional mortgage.
Solution – In this case a Reverse Mortgage may be the only option for the parties because currently there
is no minimum income or credit requirements on the parties. Assuming that the continuing Real Estate
Taxes and Insurance would be less than the rent expense for a new residence, the parties increase their cur-
rent cash flow.
Summary:
Simply put, a Reverse Mortgage is a financial instrument that can be used to monetize the Senior’s equity in the
marital residence. It is a loan based on the property value rather on the borrower’s ability to repay. This vehicle
can provide Senior’s / Retiree’s with limited income with a source of current cash for settlement purposes, or also
for a line of credit, current cash, or both for future financial concerns.
This article has only looked at the Reverse Mortgage as a tool for financial planning for one of the issues discussed
above. However, this valuable opportunity is not a one size fits all, and it is incumbent on the financial advisor to
fully understand the Senior’s current and future needs, and determine whether this is a viable alternative for their
client.
About the Author—Robert E. Kleeman, Jr is a CPA with a nationally known practice in the area of valuation,
commercial damages and complex marital litigation. Mr. Kleeman is the Primary Author of the book The Hand-
book of Divorce Valuation published by John Wiley and Sons. Mr. Kleeman can be reached at 303 771 8100,
BobKleeman@OnPointEvaluation.com.
Mr. Kleeman would like to thank Joe D. Boyd, Reverse Mortgage Professional (NMLS ID 276936) of American Ad-
visors Group (AAG) Oak Brook, IL for his technical assistance with this article. He can be reached at 630 440
6165, JBoyd@AAG.com.

4. Thomas Mastromatto, Certified Divorce Lending Professional (CDLP)
SIDE BAR DISCUSSION
NMLS#145824
ADVICE FOR GREY DIVORCES
If you’re more than 60 years old and divorcing, collaboration or mediation can be your best hope of preserving your
family’s finances.
By Nathalie Boutet , Boute Family Law
Much has been written about the fact that divorces
amongst older couples – sometimes referred to as “grey
divorces” – are steadily increasing. If you are older and
considering a separation, this article will serve as a
guide for how you can prepare yourself for this destabi-
lizing event.
In the literature I consulted while researching this sub-
ject, authors all point to three important tips: collabo-
rate, cooperate, and work together. At age 60+, people
have reached, or are close to reaching, the peak in their
earning capacity. They may be past the time when they can easily make up for the substantial financial
set back of a separation and it may be harder to qualify for a mortgage. Separating couples need to ap-
ply intelligence and collaboration when they work together if they want to preserve what they have
and minimize spending on lawyers and other professionals.
Emotional Implications
To help you work collaboratively with a former spouse and minimize the legal fees, you need to first
work through your own feelings about your life and the separation. It is no longer taboo to get help
through a personal development course, a personal coach, a therapist, a support group, or similar heal-
ing services. In fact, the opposite is now the reality: you may be perceived as the weak one if you
don’t access such services.
Anger and resentment towards your former spouse likely occupy a large part of your thoughts. The
danger is that people do not know how to differentiate between their anger towards their spouse and
the legal issues that have to be decided. They end up unconsciously giving instructions to their lawyers
from a place of anger. The legal process then becomes aggressive, adversarial, and unnecessarily cost-
ly. This is the most pervasive problem people face during the divorce process.
Further, you may not have the skills to handle strong emotions you may experience – such as guilt,
anger, or sadness arising from how your children or family members react to the separation. It won’t
help you to negotiate while you are consumed with these sentiments.

5. Thomas Mastromatto, Certified Divorce Lending Professional NMLS #145824
SIDE BAR DISCUSSION
During a lengthy marriage, you will also have created several counterproductive ways of dealing with one
another that will make it difficult to work constructively with your former spouse during the legal process.
Finally, you likely lack the skills to communicate your opinion in a manner that your former spouse can
calmly accept and understand. Instead, you’ll probably push each other’s buttons when you discuss what
you want to achieve in the divorce.
Taking time to work on yourself – to become present to and to address your negative feelings towards
your spouse, your marriage, or other aspects of your life – will ensure that you don’t bring your anger and
negativity to the negotiation table. Poor communication and unresolved emotions are issues in almost all
separations – be they grey, blond, black, or brunette. These are crucial issues that, if addressed properly,
can make a world of difference to you and your family.
Financial Implications
In addition to taking care of your emotional well-being, you also
need to become familiar with your financial situation. If you were
not the spouse who regularly handled the family’s finances, you
should sit down with a trusted financial advisor to acquire a good
understanding of your financial situation before you start to negoti-
ate your legal issues.
You need to know the sources of income that are available both now and after retirement, what assets and
debts your family has at this time, and what are the big expenditures that will surface in the future –such
as children’s university costs, weddings, long-term care, caring for elderly parents, etc.
You need to understand which healthcare benefits exist now, and which will be available after a divorce
and at what cost. Several health plans do not permit a former spouse to remain a beneficiary after a di-
vorce.
Find out what life insurance is in place on your and your former spouse’s life. If life insurance is needed
but the spouse does not qualify because of health reasons, find what other means there are to secure a fi-
nancial obligation.
A Will remains valid throughout a separation but becomes null and void after a divorce. You may need to
re-think your Will and also update your Powers of Attorney for your personal and financial care.

6. SIDE BAR DISCUSSION
NMLS #145824
In most couples, one person is more financially savvy than the other. Not to worry. The legal system is
designed to ensure that both spouses receive the financial information they need to help them make deci-
sions about their legal separation. Whether your separation will take place using collaborative law, media-
tion, other forms of lawyer-assisted negotiation, just as it is the case in the court system, you are obligated
to disclose all of your financial affairs and entitled to receive all of your former spouse’s financial infor-
mation. When couples work together to find intelligent ways of sharing their assets and to make sure that
each has what they need for their future life, they inevitably find creative solutions that both can live with
– without needlessly depleting life-savings on professional fees.
Legal process, lawyers and other professionals
Separating couples have several choices of legal processes to complete the legal separation. They are: col-
laborative practice, mediation, traditional lawyer-assisted negotiation, arbitration, and court. Even though
both collaborative law and traditional lawyer-assisted negotiation may appear similar because they both
involve negotiating with the assistance of lawyers, only the collaborative system is designed to use peo-
ple-friendly negotiation techniques known to make the negotiation process easier for the participants.
Most separations should be able to be completed without accessing the more adversarial court system,
which are means of last resort.
I favor collaborative practice and mediation because of the quality of results these systems consistently
deliver. You should take the time to read up on these systems and develop your own thinking about them
before going to see a lawyer. This is because if the lawyer you go to see does not practice collaborative
law or mediation, he or she may dissuade you from accessing these services.
In addition to lawyers, you may benefit from the assistance of other professionals, such as financial plan-
ners, financial divorce specialists, accountants, house and business valuators, and mortgage brokers. Your
lawyer will act as the quarter-back and will help you decide what other professionals could enhance your
negotiating team.
Conclusion: There are three things separating people should implement to minimize the trauma of
a separation:
1. take care of your own emotional situation,
2. have a clear understanding of your and your former spouse’s financial needs, and
3. work with one another, not against each other.
The rest – meaning your work with lawyers and other experts, getting through the actual physical separa-
tion, dealing with your children, and achieving a fair financial settlement – will fall into place. Be the
leader of your life and demand that your legal team helps you work together to preserve your family’s
wealth through the divorce process.

7. Thomas A. Mastromatto
928-533-6593
Retired Worker Fully Insured (40 credits), attained age 62, filed an application
Divorced spouse benefit - (been divorced
2 yrs or less, married totaling 10 yrs)
Be the divorced spouse of NH entitled to RIB or DIB, attained age 62, filed an application, not
currently married, claimant must not be entitled to a RIB based on a PIA which = to or greater
than 1/2 the PIA of the NH
Independently - Entitled Divorced Spouse
- (divorced at least 2 continuous yrs,
married totaling 10 yrs)
Be the divorced spouse of a fully insured worker age 62, attained age 62, filed an application,
not currently married, claimant must not be entitled to a RIB based on a PIA which = to or
greater than 1/2 the PIA of the NH
Eligibility Requirements
Spousal Benefit - (married at least 1 year) Be the spouse of NH entitled to RIB or DIB, attained age 62, filed an application, claimant must
not be entitled to a RIB based on a PIA which = to or greater than 1/2 the PIA of the NH
Age Worker Spouse
62 75% 70%
63 80% 75%
64 86.66% 83.33%
65 93.33% 91.67%
66 100% 100%
67 108% 100%
68 116% 100%
69 124% 100%
70 132% 100%
Reduction/Credit by Election AgeYear of Birth Full Retirement Age
1937 or earlier 65
1938 65 yrs 2 mos
1939 65 yrs 4 mos
1940 65 yrs 6 mos
1941 65 yrs 8 mos
1942 65 yrs 10 mos
1943-1954 66
1955 66 yrs 2 mos
1956 66 yrs 4 mos
1957 66 yrs 6 mos
1958 66 yrs 8 mos
1959 66 yrs 10 mos
1960 or later 67
Widow (survivor) Benefit - (married
minimum 9 mos)
Be the widow of a NH who died fully insured, attained age 60, be unmarried unless you
remarried after reaching age 60, filed an application, not be entitled to RIB = to or greater than
the deceased NH's PIA, proof of NH's death
Surviving Divorced Spouse Be the surviving divorced spouse of a NH who died fully insured, attained age 60, be
unmarried unless you remarried after reaching age 60, filed an application, not be entitled to
RIB = to or greater than the deceased NH's PIA, proof of NH's death
Eligibility Requirements (Rightstart Mortgage Inc #145824)
Deceased DID
file
Filed prior to FRA: Max
Widow Benefit = Larger of
deceased reduced benefit or
82.5% of deceased PIA
Filed After FRA: Max Widow
Benefit = Deceased Benefit
including Delayed Retirement
Credits
Deceased did
NOT file
Died prior to FRA: Max Widow
Benefit = PIA of Deceased
Died after FRA: Max Widow
Benefit = Deceased benefit as if
deceased elected on date of death
including Delayed Retirement
Credits
Widow Options Widow Full Retirement Age
Date of Birth FRA
Through 1/1/40 65
1/2/40 - 1/1/41 65 yrs 2 mos
1/2/41 - 1/1/42 65 yrs 4 mos
1/2/42 - 1/1/43 65 yrs 6 mos
1/2/43 - 1/1/44 65 yrs 8 mos
1/2/44 - 1/1/45 65 yrs 10 mos
1/2/45 - 1/1/57 66
1/2/57 - 1/1/58 66 yrs 2 mos
1/2/58 - 1/1/59 66 yrs 4 mos
1/2/59 - 1/1/60 66 yrs 6 mos
1/2/60 - 1/1/61 66 yrs 8 mos
1/2/61 - 1/1/62 66 yrs 10 mos
1/2/62 or later 67
Filing Options - Married/Divorced
62 CAN'T
63 "Restrict to only spousal"
64 "Suspend"
65
FRA → 66 CAN
67 "File & Suspend"
68 "Restrict to only spousal"
69 "Suspend"
70
RIB - Retirement Insurance Benefit
DIB - Disability Insurance Benefit
NH - Number holder (worker)
PIA - Primary Insurance Amount
FRA - Full Retirement Age
COLA 1.5%
Maximum Taxable Earnings $117,000
Quarter of Coverage $1,200
Earnings Test Exempt Amount
Year individual reaches FRA $41,400/yr
($3,450/mo)
2014 Social Security Facts
Under FRA $15,480/yr
($1,290/mo)
Born between 1943-1954
First 36 Months
Months in Excess
of 36
Spousal 25/36 of 1% /mo 5/12 of 1% /mo
Retirement 5/9 of 1% /mo 5/12 of 1% /mo
Reduction Percentages
Abbreviations
9/5/2014

8. Thomas Mastromatto, Certified Divorce Lending Professional NMLS #145824
Divorce Money Matters
NMLS #145824 Thomas Mastromatto, Certified Divorce Lending Professional (CDLP)
Baby Boomer Attitudes on Housing Might Surprise You
by Jann Swanson Posted to MND NewsWire
A survey of attitudes toward housing released on Thursday by The Demand Institute indicates that the Baby
Boom generation still has no intention of aging gracefully. In fact, when it comes to housing it appears
few intend to yield at all to their advancing years.
The Institute, a nonprofit run by the Conference Board and the Nielson ratings people, surveyed 4,000
households last year in which residents qualified as members of that huge post-war generation born be-
tween 1944 and 1963 about their future housing plans.
The survey found that as a group Baby Boomers had a median net worth of $200,000 in 2007 and were on
their way to accumulate nearly $370,000 by 2013.
Instead the recession sent many off the rails and at
the time of the survey that median net worth was
down to a median of $143,000. Although many
Boomers have delayed or modified their
plans due to the recession they have, the Institute
says, not abandoned them entirely. Over the next
five years it is expected they will spend $1.9 tril-
lion on new home purchases and $500 billion on
rent.
Whether for financial reasons or by choice the ma-
jority of the generation is still working but 58 per-
cent plan to retire within five years. Among younger members, those 50 to 59 at the time of the sur-
vey, only 23 percent were retired while 34 percent planned to be within that time frame. Sixty-nine per-
cent of the older group, those 60 to 69 years of age, were already retired and 80 percent had plans.
Whatever their working plans, the survey
found that the generation has some counter-
intuitive plans for their housing. Thirty-
seven percent said they plan on moving, but
while the common wisdom has older folks
downsizing as they age, 46 percent of those
who plan to change locations are looking for
nicer homes or more space. Nearly half plan
to spend as much or more money on housing
after they move.
interested in residing in a senior community
or retirement setting.

9. Divorce Money Matters
NMLS #145824
The Institute says the 46 percent of those respondents who are looking for a larger home or plan to
spend as much or more as they currently do are less affluent than the respondents overall and many de-
layed their housing plans because of the recession and its impact on their finances. They have median
net worth of $40,000 and currently live in a home with a median of 1,200 square feet. "Downsizers"
on the other hand live in a median 2,000 square foot home (compared to 1,600 for all respondents) and
have median net worth of $322,000.
"Upsizers are finally looking to purchase their
dream home," the report says. "Many in this
group will move from renting to owning, but
they are not necessarily looking to spend lav-
ishly - the median price of their next home will
be $180,000, less than the $200,000 of the
more affluent "Downsizers."
The "Downsizers" are either looking for a
smaller home or to spend less for a home simi-
lar in size as they own or currently occupy.
"Many are currently living in larger, more ex-
pensive homes that will be difficult to maintain
as they age. But just because they are looking
for smaller homes, it doesn't mean they are nec-
essarily looking to settle. Many will seek
homes with high-end finishes and nearby ser-
vices and amenities."
Those who plan to move won't go far. Sixty-
seven percent say they will stay in the same state and a quarter plan to stay within 10 miles of their cur-
rent homes. The remaining third are motivated as much by wanting to live closer to family as they are
by a change of scenery or climate. Maintaining connections to friends and community is an important
consideration and only about 20 percent of those who will move are interested in residing in a senior
community or retirement setting.
Whether downsizing or not, most Baby Boomers who plan to move will continue to live in single fami-
ly homes and most intend to buy. While slightly less than half currently live in one-level homes one is
an overwhelming choice for the next home. Despite the maintenance, most still want a house with a
garden or yard.
The Institute asks if all Boomers are making the most prudent housing decisions as they approach re-
tirement. "Not necessarily," they say. "Regardless, their decisions will have important implications as
this generation, once again, does it their way.

10. NMLS #145824
NMLS #145824 Thomas Mastromatto, Certified Divorce Lending Professional (CDLP)
Divorce Puzzle Pieces
A Study from Ohio’s Bowling Green State University shows that one
quarter of all American divorces now involve someone 50 or over
– more than double that of just 20 years ago. While those seeking
late-life or ‘grey’ divorces, as they are sometimes called, tend to have
a rosier outlook than their younger counterparts of life after the
dissolution of a marriage, older divorces also face unique financial
problems that others do not. Odds are accumulated assets, from real
estate to retirement savings, are substantial and entwined, and
impending retirement can make a favorable financial split
particularly tricky.
According to a study from AARP, more than one in four of grey
divorces fear not having enough money in their post-split lives, a fear that comes second only to loneli-
ness. This is particularly true among women who were four times more likely than their male counter-
parts to be concerned with the negative effect of divorce on their finances.
The Grey divorce is defined by the growing trend of high divorce rates among Baby Boomers.
 In 2009, 1/4 People over 50 divorced.
 In 1990, 1/10 People over 50 divorced.
A little divorce humor…..