Senior Bridge Loans with Mark Maimon: Insights on the Housing Market and Senior Housing Transition
Mark Maimon, a luminary in the mortgage industry since 2002, has seamlessly closed over $2 billion in total loan volume. Consistently ranked among the nation’s top loan originators since 2006, Mark has earned accolades such as a “Power Originator” and “Hot 100 Mortgage Professional” by Mortgage Professional America magazine. A sought-after contributor to national publications, podcasts, and training programs, Mark leads a successful national bridge loan program serving around 30,000 real estate agents across the United States.
Mark’s team orchestrates a thriving bridge loan program, facilitating property purchases for homeowners and investors before selling their current assets. Expanding into the Senior Living Community space, the program aids seniors in securing funding for entry fees, home repairs, renovations, and other living expenses during their transition into senior housing.
We sat down with Mark to glean insights into the current housing market and its implications for aging adults transitioning into senior housing.
Q&A with Mark Maimon
Next Best Home: Mark, tell us about your observations regarding the housing market.
Mark: In Q4 2023, we’re witnessing a softening market. Days on the market, a crucial metric in real estate, is increasing, indicating that homes aren’t as easy to sell as they had been previously. There’s also a rise in transactions falling out of escrow, with buyers backing out for various reasons.
Next Best Home: How does this relate to aging adults transitioning into senior housing?
Mark: With an increased housing inventory and longer days on the market, continuing care communities are adjusting their policies. It’s becoming far more risky for communities to offer promissory notes or extended entry fee due dates to allow proposed residents additional time to sell their homes because offers aren’t coming in as rapidly for those homes. And as inventory increases, buyers are opting more often for homes that haven’t been “lived in” for decades by seniors because they don’t want to undertake the project of updating the home if they can choose another one to buy that is more move-in ready. This is why the past strategies of communities to give significant leniency (or loans) to seniors may result in far more delinquencies and delayed payments to the community, thus putting the community in a financial bind.
Next Best Home: Promissory notes sound risky. Why not opt for other alternatives?
Mark: Promissory notes are indeed risky, especially for businesses. It’s an unnecessary risk for the community and keeps the community from having access to capital that it may need for other projects or expenditures. A bridge loan provides a more secure solution for both parties involved and puts the financial responsibility on the consumer rather than the community. And it happens quickly so the community can get their entry fee upfront rather than fronting money to the senior in hopes that they can sell their home quickly. That assumption is starting to slip away from us and communities need to be aware of the heightened risk they are taking on in this changing environment.
Next Best Home: Can you share a recent example highlighting the risks of promissory notes?
Mark: Certainly. In a recent case in New York, a client moving into a community had a promissory note in place. Three canceled escrows and six months later, the business was left still footing the bill. The reasons for the failed escrows were not the seller’s fault, yet the business suffered financially. Before the senior was going to be asked to move out of the community for non-payment, we were able to secure a bridge loan to cover the entire entry fee as well as 6 months of payments so the senior didn’t have to dip into savings or taxable accounts. But had the community referred us from the beginning, they would have had the 6-figure payment to use nearly half a year prior.
Next Best Home: Does a bridge loan always make more sense than selling when entering a continuing care community?
Mark: Well, it really depends on the circumstances and needs of the senior. But from a capital gains tax perspective, the worst time to sell a home a senior has owned for decades is in the months and years leading up to their passing. This is because you can get stuck with a very significant tax bill if the property has gained substantially in value over that time period. Therefore if the family is able to maintain the home after the senior moves out (while doing a bridge loan to fund the entry fee), then they have the option to sell the home after the senior passes. When that happens, the home value the IRS uses to determine if/how much capital gains tax is due is based on a “stepped up basis”, which is the home value at the time of their passing rather than the time of the purchase which could have been decades earlier when home prices were dramatically lower. One unique characteristic of some of our bridge loan products is that they can be held long-term (up to 30 years) if the senior chooses to – unlike other senior bridge loan products that have a balloon payment due in 6-12 months after closing on the loan. This estate planning strategy of selling after a senior’s passing could potentially save the heirs hundreds of thousands of dollars in taxes, so if a senior and their supporting family members can keep the house and make payments in the meantime, it’s possible that the tax savings might far outweigh the mortgage payments made over time. We recommend that seniors and their families discuss this important strategy with their accountants and estate planning attorneys to determine the best approach for their needs.
In conclusion, Mark Maimon’s insights shed light on the evolving dynamics of the real estate market, particularly in relation to senior housing transitions. As the industry navigates changes, the role of secure financial instruments like bridge loans and creative senior bride loan providers like Mark and his team becomes increasingly significant in ensuring a smooth and risk-averse transition for both residents and communities. For those considering senior housing, strategic financial planning is the key to a seamless move. Contact Mark directly to find out how to partner with your organization to ensure you’re putting yourselves in the strongest financial position and avoiding unnecessary risk.
You can reach Mark here Mark Maimon
