Layla Zulfa
Anna Frankowska, the visionary founder and CEO of Miami-based Graceful Finance, is introducing a groundbreaking financial product designed to empower senior homeowners. Dubbed the "Lifestyle Agreement," this innovative offering provides an alternative to traditional debt-based solutions like reverse mortgages and home equity investments, aiming to address the evolving financial needs of retirees. Frankowska emphasizes that Graceful Finance is not seeking to reinvent the wheel but rather to adapt and refine a proven concept for the U.S. market.
Founded just three years ago, Graceful Finance currently operates exclusively within Florida. However, the company harbors ambitious expansion plans, with California and Texas identified as immediate next targets. The Lifestyle Agreement product is closely modeled on home reversion contracts, a financial instrument that has enjoyed widespread adoption in various international markets for decades. Its core purpose is to serve a specific segment of senior homeowners who are seeking to enhance their cash flow in retirement without incurring additional debt.
"We drew inspiration from successful models around the world and meticulously adapted them to the U.S. market and its existing legal framework," Frankowska stated in an exclusive email interview with HousingWire’s Reverse Mortgage Daily. This global perspective has been crucial in shaping a product that addresses a pressing need in the current economic climate.
Frankowska points to the global prevalence of home reversion schemes, noting their popularity in countries such as the United Kingdom, France, and even Australia. The current economic landscape, characterized by elevated interest rates, has created a particularly opportune moment for equity-based financial products. High interest rates have demonstrably impacted reverse mortgage origination volumes, leading many individuals who might have previously considered a reverse mortgage to hesitate due to lower principal limit factors. The Lifestyle Agreement, Frankowska asserts, offers a unique and compelling solution to this challenge.
The Mechanics of the Lifestyle Agreement
At its heart, the Lifestyle Agreement operates on a principle that has stood the test of time in numerous countries: the homeowner sells a portion of their future ownership rights in their home in exchange for immediate financial benefits. This exchange allows seniors to access a portion of their home equity without the burden of traditional mortgage or rent payments, while retaining the right to live in their home for the remainder of their lives.
A key distinction of the Lifestyle Agreement is its eligibility criteria. Homeowners must be at least 75 years old to qualify, a threshold higher than the 62 years required for Home Equity Conversion Mortgage (HECM) eligibility and the 55 years often associated with proprietary reverse mortgages. While the Lifestyle Agreement’s availability is currently limited, Frankowska expressed confidence in its scalability. "It’s built to scale across any state where life estate deeds are recognized under existing property law – which is effectively all 50 states," she explained.
Graceful Finance employs a sophisticated calculation methodology to determine the amount of funds available to homeowners. This calculation takes into account several critical factors: the homeowner’s age, the current market value of their property, and its specific geographic location. Homeowners then have the flexibility to choose how they receive these funds. They can opt for regular monthly payments for a predetermined number of years, or they can elect to receive a portion of the funds as an upfront lump sum.
To illustrate the product’s potential, Graceful Finance provides a hypothetical example on its website. Consider a 79-year-old homeowner whose residence is valued at $1 million. This homeowner faces annual property tax and insurance expenses of $8,000. Their current annual retirement income is $60,000, which, after accounting for taxes and insurance, amounts to $52,000. Under the Lifestyle Agreement, Graceful Finance would provide this homeowner with an immediate lump sum of $100,000. In addition, they would receive monthly payments totaling $32,000 per year for the next 12 years, extending until they reach the age of 91. Crucially, even after the 12-year payment period concludes, Graceful Finance commits to covering the homeowner’s property taxes and insurance for as long as they reside in the home.
Frankowska highlighted the significance of addressing property taxes and insurance as a core component of the Lifestyle Agreement. "We found that [taxes and insurance are] a major pain point and a major foreclosure reason for older adults," she stated. While acknowledging the existence of solutions like the Life Expectancy Set-Aside (LESA) within reverse mortgages, Frankowska pointed out that the combination of LESA requirements and high interest rates can create significant hurdles for many borrowers seeking to qualify. "We remove the problem entirely," she asserted, emphasizing the product’s ability to circumvent these common obstacles.
A pervasive fear among seniors is the notion that "the bank will take my home." The Lifestyle Agreement is designed to alleviate this anxiety. By eliminating mortgage and rent payments, the risk of foreclosure and eviction is effectively removed, a stark contrast to some other home equity solutions like sale-leasebacks. Furthermore, the lifetime tenure of the Lifestyle Agreement distinguishes it from home equity investments (HEIs), which typically operate with much shorter terms, ranging from 10 to 30 years.
Beyond its direct-to-consumer outreach, Graceful Finance is actively pursuing strategic partnerships with reverse mortgage lenders and financial advisors. The company aims to collaborate with these professionals to offer the Lifestyle Agreement as a valuable option for their clients who have unmet financial needs that traditional products cannot adequately address.
Navigating Counseling and Appraisal Mandates
Prospective homeowners considering a Lifestyle Agreement must also be aware of certain procedural requirements and potential implications. Graceful Finance advises that while Social Security and Medicare payments are generally unaffected by the agreement, Medicaid eligibility could be impacted depending on an individual’s overall financial situation. To ensure informed decision-making, the company strongly recommends that homeowners review the agreement thoroughly with a benefits advisor or an elder-law attorney before signing.
Mirroring the requirements of HECMs, Graceful Finance incorporates a mandatory counseling component into its Lifestyle Agreement process. Frankowska indicated that this aspect of the agreement was inspired by established frameworks in the United Kingdom. The counseling sessions are conducted by independent, third-party professionals, ensuring impartiality. These sessions involve a comprehensive suitability assessment, the provision of disclosures in clear, understandable language, and a detailed explanation of alternative financial options, including reverse mortgages and home equity lines of credit (HELOCs). Frankowska believes these robust consumer protections are fundamental to the product’s long-term sustainability and its potential for institutional adoption, citing its successful implementation in other global markets as evidence.
Another critical element of the Lifestyle Agreement is the requirement for an in-person appraisal of the property. This stands in contrast to the automated valuation models (AVMs) that are frequently employed in many HELOC or HEI transactions. Frankowska underscored the importance of this rigorous appraisal process. "This is an important, emotional decision for the homeowner – and for buyers, it’s a significant investment. Both sides deserve accuracy," she explained. While Graceful Finance is committed to streamlining other aspects of the process to reduce timelines, it maintains a steadfast commitment to certain non-negotiable steps. "We can decrease timelines by improving other parts of the process, but there are certain steps we won’t compromise on, and [the appraisal] is one of them."
The slightly extended timeline necessitated by the in-person appraisal is viewed as a worthwhile trade-off for enhanced accuracy and consumer protection. Frankowska emphasized that because the homeowner is not undertaking a loan, the overall transaction process is inherently simpler and faster than mortgage-dependent transactions. This is due to the absence of loan documents, borrower underwriting delays, and lender-specific disclosures.
A Global History of Home Reversion and Life Estate Agreements
The concept of home reversion and life estate agreements is not new. In the United States, a New York-based company named Irene began offering similar "life estate" deals in 2018. Under Irene’s model, the company purchased homes and allowed the original owners to continue living in them for life, without the responsibility of mortgage, property tax, or insurance payments. While Irene secured venture capital seed funding in its initial phase, the company ceased operations in 2020, according to the LinkedIn profile of its founder, Fabrizio Tiso.
Globally, home reversion schemes have a more established track record. Data published in 2024 by the Organisation for Economic Co-operation and Development (OECD), an international coalition of 38 developed nations, indicates that home reversions are more prevalent than reverse mortgages in several European countries, including France, Germany, Italy, and Poland. The OECD report clarifies a key distinction: "Unlike with a reverse mortgage, the homeowner does not retain full ownership of the home with a home reversion, though they can still retain a portion of it that can be passed to their heirs. The home equity is normally sold at a discount. However, as this is not a loan, no interest accrues and the homeowner is normally able to obtain a larger sum than they would have with a reverse mortgage."
The OECD also highlights the prevalence of "viagers" in countries like France, Belgium, Spain, and Switzerland. Viagers are agreements structured between private individuals rather than involving a financial institution. According to a French affiliate of Christie’s International Real Estate, viagers account for approximately 5,000 home sales annually in France, representing about 1% of all real estate transactions.
In recent commentary, Geoffrey Sanzenbacher, an economics professor at the Center for Retirement Research at Boston College, provided an analysis of life estate agreements similar to those offered by Graceful Finance. He acknowledged both the advantages and disadvantages of such arrangements. "Because the home is sold, it cannot be left as a bequest, and, in exchange for immediacy and the value of the elimination of property taxes and insurance costs, the amount paid out is considerably less than the home’s value," Sanzenbacher wrote. He further noted that "The bequest issue especially may be a barrier for many households, but the company is betting that many baby boomers are looking to live their best lives now and will therefore value the option of using their housing wealth in this way."
This perspective underscores the fundamental trade-off inherent in the Lifestyle Agreement: the relinquishment of a potential bequest in exchange for immediate financial flexibility, enhanced cash flow, and the elimination of significant homeownership costs. As the demographic landscape of retirement continues to evolve, products like Graceful Finance’s Lifestyle Agreement are poised to play an increasingly vital role in providing seniors with innovative solutions to navigate their financial futures.
