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  1. #11681
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    It is easy to see why Banks want to avoid adverse publicity from relatives miffed that they have lost some inheritance.
    Before investing in Heartland I looked into their methods carefully.
    It appears entirely in keeping with current morals and ethics.
    The elderly have a right to take a loan out using house as security to enjoy life.
    They will not be evicted by heartland should a financial disaster eventuate

  2. #11682
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    I am surprised that well informed punters like some on here are questioning the ethics of the RELs.
    Bear with me while I share my recent experience. Over the last 3-4 weeks, I have been assisting a friend and his sister to deal with some financial pressures on their parents and themselves as a result. The father had a stroke about 10 years ago and is wheelchair bound. Apart from that, they are both in reasonably good health for people in their mid seventies.
    They struggle physically with him in a wheelchair and also struggle to make ends meet. In fact, they are supported financially by their 2 children with small weekly top ups just to make ends meet and to buy half decent groceries. Often baked beans on toast is all they can afford.This is difficult for the "children", neither of whom are high income earners. The car is small and unsuitable for an ageing lady to service her husband's needs. She would like new curtains and some rooms painted in their $650,000 fairly moderate, nice and warm home. They do not want to nor feel like they have to go to a retirement home.

    I know them well and find it sad that they have to live their twilight years like this, much harder than they deserve. So I discussed RELs with them(the children) and they asked me to get the info. I've been in contact with Heartland and they were extremely helpful and caring. At no stage did they try a hard sell. Quite to the contrary, they were very supportive, informative and very clear that they require family to buy in and legal advice sought.

    After a lot of discussion, I am pleased that the family have come to their own conclusion (I've not give any advice for or against, only explained the option) that they will apply for a loan to upgrade the car, get new curtains and possibly paint some rooms in the house. They may further seek a monthly or annual small top up. In my view, if they do this, it will make the twilight years of this lovely old couple MUCH more enjoyable and easier. Unless they both live beyond 105-110 years and continue spending as they are now, the effect on their equity is absolutely minor by any stretch of the imagination.
    Their children will also be relieved not having to continue their small top ups, which in reality is just buying their own heritage.

    So as fish says above, this situation and the solution provided by RELs, is "entirely in keeping with current morals and ethics" as far as I am concerned. Continuing as they're doing now is not.
    Last edited by iceman; 06-12-2018 at 08:05 AM.

  3. #11683
    Legend peat's Avatar
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    I agree iceman it is a perfectly valid financial tool for elderly of sound mind, and I find it offensive that the heirs are consulted or have any input into this decision.
    Case law clearly shows that any potential inheritance does not exist until death and can not be relied upon. Although of course there is the increasing notion of both equity and adequate provision that courts appear to be supporting within the will itself this is different from assuming an inheritance.
    With RELs the issue of sound mind is quite a difficult one. Cognitive impairment, senility, Alzheimers - what ever you describe them as , these are not binary switches where one day your competent and the next day you're not. They develop over sometimes long periods of time and ebb and flow along the way during which they may be able to make reasonable rational decisions sometimes , and at other times appear flummoxed by daily tasks.
    Competence can be complicated , exactly at the same time as these sorts of financial decisions arise. This makes the lending riskier but the standardisation of the terms will allow lenders to increasingly mitigate this risk

    I think RELs are a good business to be in for the future as many elderly are asset rich but cash poor. Maybe it is prudent to have family members involved as well, but I believe that is the borrowers decision alone.

    (My 86 year old Mum has a REL on her property in QLD which I fully supported her taking out)
    Last edited by peat; 05-12-2018 at 10:03 PM.
    For clarity, nothing I say is advice....

  4. #11684
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    Quote Originally Posted by Baa_Baa View Post
    But now I'm wondering whether it's becoming one of those 'ethical investment' questions.
    What ethical issues concern you?

    I see none - indeed teh opposite.

    As we go through life we ought to either build up capital in a bank account (or other liquid assets), build up capital in our own property (by aiming to be mortgage free) or a mix of both This way we have a better way of enjoying life post working days.

    All a REL is doing is releasing capital that teh home owner has created over time. Why should they not use it in later life? They cant take it with them to teh grave and relatives should have no expectation of getting their mitt on it - in the same way they ought not think they have free access to cash in a bank account.

    I think RELs are great idea. Though I dont see why a bank cant just extend a mortgage till death. I presume they simply dont want to be involved in that level of paper work

    There is no reason at all for a person with equity in their home to live a financially stressed life. As people age their financial demands arent great relative to potential held equity. In icemans example a nice new set of curtains and newly painted rooms isn't going to take much out of the house equity. In fact these purchase may actually add value to the home. If these folks wanted to push the boat out they could probably get some doors widened and make sure their are enough handrails. Maybe even one of those uppy/downy beds. Ways to make life easier for both. HGH (in my view) are very conservative with teh amount they will lend on a $650,000 property - it was me I'd be extending the limit. Maybe that is for years to come.

    Disc. Disappointed holder of HGH and still carrying a paper loss

  5. #11685
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    In posting the above article all I was alluding too was that Aust seems to have been rife with shonky REL and this could bite HGH.

    I was NOT implying that HGH are guilty of shonky REL practice. Indeed if you read the article, much of the difficulty in this case was that the person making the loan was not required to take independent legal advice. I understand HGH are strong on this point and that is why they get Consumer NZ's ethical ranking. In this I agree with Percy that HGH are setting new, high standards in REL and that is their strength.

    However, the bad actions of a few (other lenders) can muddy the waters.....

  6. #11686
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    Quote Originally Posted by Left field View Post
    In posting the above article all I was alluding too was that Aust seems to have been rife with shonky REL and this could bite HGH.

    I was NOT implying that HGH are guilty of shonky REL practice. Indeed if you read the article, much of the difficulty in this case was that the person making the loan was not required to take independent legal advice. I understand HGH are strong on this point and that is why they get Consumer NZ's ethical ranking. In this I agree with Percy that HGH are setting new, high standards in REL and that is their strength.

    However, the bad actions of a few (other lenders) can muddy the waters.....
    Yes there have been muddy waters. I noticed a lot of muddy waters in Australia.
    Tightening the regulations have helped,but perhaps the Australian Govt offering REL's, via pension top ups rather than lump sums,is giving the REL market greater acceptance.

    In NZ acceptance appears to be behind Australia.I would think the NZ market would grow faster if HGH had a major bank as a competitor.
    That said,over the past 10 years acceptance of RELs has grown,and looks to be gaining momentum.
    Last edited by percy; 06-12-2018 at 08:03 AM.

  7. #11687
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by iceman View Post
    I am surprised that well informed punters like some on here are questioning the ethics of the RELs.
    Bear with me while I share my recent experience. Over the last 3-4 weeks, I have been assisting a friend and his sister to deal with some financial pressures on their parents and themselves as a result. The father had a stroke about 10 years ago and is wheelchair bound. Apart from that, they are both in reasonably good health for people in their mid seventies.
    They struggle physically with him in a wheelchair and also struggle to make ends meet. In fact, they are supported financially by their 2 children with small weekly top ups just to make ends meet and to buy half decent groceries. Often baked beans on toast is all they can afford.This is difficult for the "children", neither of whom are high income earners. The car is small and unsuitable for an ageing lady to service her husband's needs. She would like new curtains and some rooms painted in their $650,000 fairly moderate, nice and warm home. They do not want to nor feel like they have to go to a retirement home.

    I know them well and find it sad that they have to live their twilight years like this, much harder than they deserve. So I discussed RELs with them(the children) and they asked me to get the info. I've been in contact with Heartland and they were extremely helpful and caring. At no stage did they try a hard sell. Quite to the contrary, they were very supportive, informative and very clear that they require family to buy in and legal advice sought.

    After a lot of discussion, I am pleased that the family have come to their own conclusion (I've not give any advice for or against, only explained the option) that they will apply for a loan to upgrade the car, get new curtains and possibly paint some rooms in the house. They may further seek a monthly or annual small top up. In my view, if they do this, it will make the twilight years of this lovely old couple MUCH more enjoyable and easier. Unless they both live beyond 105-110 years and continue spending as they are now, the effect on their equity is absolutely minor by any stretch of the imagination.
    Their children will also be relieved not having to continue their small top ups, which in reality is just buying their own heritage.

    So as fish says above, this situation and the solution provided by RELs, is "entirely in keeping with current morals and ethics" as far as I am concerned. Continuing as they're doing now is not.
    Very nicely said mate. Why shouldn't elderly folks live with some dignity, financial freedom and enjoyment in their latter years, its their money not their kids !
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

  8. #11688
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    Iceman, Percy, Beagle I'm with you on this one and should have added/disclosed to my post earlier today that I've added some HGH to my portfolio taking advantage of recent 'lows.'

    I think HGH have the opportunity to 'disrupt' the REL industry in an ethical and honourable way. It's not without risk as the article shows, but I've been impressed by what HGH offers in this market. I'm recently retired and although I don't see a need for a REL in my future, it is nice to have a credible operator offering such a service in that sector.

    With the structural changes HGH has recently made, it is now 'well positioned' and I hope other investors are too!

    (Disc; Holding. DYOR)

  9. #11689
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    News today:
    Heartland Group Holdings Limited (NZX/ASX:HGH) (Heartland Group) announces
    that it has established a Dividend Reinvestment Plan giving eligible
    shareholders opportunity to reinvest some or all of their dividend payments
    into new ordinary shares in Heartland Group.

  10. #11690
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    Don’t forget that Heartland Bank HBL got acquired by a new company Heartland Group HGH and that if you want to participate in the HGH DRP you need to sign up for it.
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

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