Reverse mortgage, CHIP = the good,

My question is: Canadian-specific
QUESTION: what is good and what is bad,
about a reverse mortgage
thank you for your time.
david ingram replies:
This is an old answer - it may help
Every week I get a couple of enquiries about the CHIP.
I just about always say "NO".  It is too expensive a method for a senior to
get money.
Forget about the "tax free" comments made by some commentators.
Let me tell you a real story.
I have had coffee with a certain senior at least 100 times in the last three
years.  We both belong to a coffee klatch that meets three times a week,
A couple of months ago, he mentioned that he had a CHIP reverse mortgage and
asked me to look at it because his wife was perturbed by it.
I "finally" got a look this morning.
My senior has $93,600 in a money market fund making about 2%.  He has $5,000
in cash making diddly squat and his wife has $10,000 in cash also making
diddly squat.
That adds up to $108,600.  On Oct 30, 2001, they borrowed $109,362 and paid
a CHIP FEE of $1,285 for a total loan amount of $110,647.00.
At the most, they have used $800 of the $110.600 loan.
On June 9, 2005, 3 2/3 years later, they owe $144,270.52, which amounts to
some $34,908 of interest while they have earned about $6,000 of interest.
They may have spent $800 of the actual money borrowed.
They have had no peace of mind, no security of their property and are
anything but satisfied.
The worst part is that the plan was sold to them by one of my ex-associates.
The CHIP website at paints a glowing picture.
The CHIP folder containing the CHIP brochure and information has glowing
testimonials from Mr and Mrs Jones, Mr and Mrs Miller,  Mr Peters, Mr and
Mrs Davies and Mrs Johnson.
I assume that none of the names are correct because one of the couples
pictured is the couple I am talking about.
What's more, their picture was on the brochure BEFORE they took out a CHIP
reverse mortgage.
They were paid a small fee by a commercial photographer friend because he
needed a picture of a senior couple.  The picture was taken a couple of
years before they took out the CHIP reverse mortgage.
1.     I have known this couple since the 70's.
2.    It was sold to them by an ex associate of mine.
3.    I forgot to mention that their financial advisor told them NOT to take
it out.
4.     I regularly have coffee with the husband.
And they "STILL" ended up with what is undoubtedly junk in their
I think that the CHIP people should give them back their money. My couple
had absolutely NO reason to take out the loan other than the smooth talking
(suave as the lady of the house described him) salesman who told them it was
a good thing to do.
They signed for a plan that is adding interest to the balance at a
compounded rate of 7.150 to 7.840% over the last 44 months.
I can testify that very few people have returned enough income over the last
4 years to make a profit of 7% a year.
The advertising (four new television commercials at we have
been seeing on television points out the investment possibilities.  Their
are many good reasons for making an investment loan but NOT at 7 1/2 % when
you can go to any of the chartered banks and loan money by a HELOC (home
equity line of credit) at anything from 3 1/2 to 5%.
Listen to the Fred Snyder Show at 9 AM on Sunday morning on CKBD radio (600
on AM dial) in Vancouver.
If not  in the Vancouver listening area, you can hear it live on the
internet at
AND, if you did not get this in time, you will be able to listen to the show
in Archives for a month.
If you do want to know what to do with your mortgage be sure to come out to
one of our Thursday seminars.
Guess what, one of the three couples is the couple I am talking about and
they NEVER gave an endorsement.
David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321 Fax (604) 980-0325
Disclaimer:  This question has been answered without detailed information or
consultation and is to be regarded only as general comment.   Nothing in
this message is or should be construed as advice in any particular
circumstances. No contract exists between the reader & the author and any
and all non-contractual duties are expressly denied. All readers should
obtain formal advice from a competent financial, or real estate planner or
advisor & appropriately qualified legal practitioner, tax or immigration
specialist in connection with personal or business affairs such as at If you forward this message, this disclaimer must be
included." This from "ask an income tax and immigration expert" from
<>  or <>  or <> . David Ingram deals on a
daily basis with expatriate tax returns with:
multi jurisdictional cross and trans border expatriate problems  for the
United States, Canada, Mexico, Great Britain, the United Kingdom, Kuwait,
Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France,
Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia,
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India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba,
Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK,
GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas,
San Antonio and Houston Texas
Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration
Tips, Income Tax and Immigration Income Ta


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