Is selling the $4,000,000 house and downsizing to a $1,500,000 house possible?
I would say not at this time. There are no health reasons forcing them to do so.
There are many emotional & quality of life reasons for them to stay.
If it isn't possible to downsize to free up funds due to "emotional reasons". There is no reason to borrow against it.
Whatever this schiester is pitching to them should be avoided. Downsizing and freeing up money is the preferred way, they have control over their money. Anything else and someone is lending them money, which means less control.
A HELOC is a glorified credit card. Enough said there.
A "reverse mortgage' is often pitched on television, that should tell you something about the quality of the product. The only people I am aware that that have gotten one are BROKE. They didn't save and are scrounging for money. I look at it essentially as a "balloon loan". With balloon loans the bank gives you a bunch of money upfront; then the principle, IN BULK, comes due a set amount of time later. That make sense for large scale real estate investors, not for Joe lunchbox.
I call it a balloon loan, as the bank doles out a portion of the balloon amount each month until the equity is exhausted. At the end of the set period you owe a bunch of money. I read one bank's statement regarding this that read to the effect," You don't have to give us your house, you can simply repay the loan!" WTF! If you took out this loan you will be in no position to repay it at the end of the term. It is a LOAN. Banks make money on loans, the borrowers do not. Investing against a loan sounds like a scheister's get rich quick scheme.
Have them downsize and free up a million. They wouldn't need to invest. Just live off that amount. If they do anything else than downsize it is foolish in my view.