Time Magazine Reverse Mortgage Feature

time-logo Time Magazine published an article about how the recession has been brutal for older Americans who were counting on their depleted net eggs are turning to reverse mortgages to help supplement their stash. 

In the three months after February–when a provision in the economic-stimulus package raised the eligible home-value limit from $417,000 to $625,500–the number of federally insured reverse-mortgage originations jumped 10% compared with the same period last year. Industry experts predict that reverse mortgages will play an increasingly important role in the coming years as some 70 million baby boomers hit their 60s–often with a lot less saved than they’d hoped.

This has some folks in Washington concerned. In June, the Government Accountability Office said it had uncovered misleading marketing practices in the reverse-mortgage industry, and Missouri Senator Claire McCaskill, a longtime consumer advocate, chaired a hearing to investigate predatory lending tactics.

Advertisement

Comptroller of the Currency John Dugan recently noted that reverse mortgages, like some flavors of the infamous subprime mortgages, are too complex for many seniors to understand. "Millions of older Americans still have a lot of equity in their homes, and it’s tempting for them to tap into this pot of money," he says.

Still, under the right conditions, these loans can be a sensible solution to a tough financial situation.  To read the rest of the article click the link below.

The Pros and Cons of Reverse Mortgages

Join the Conversation (0)

see all

This is a professional community. Please use discretion when posting a comment.

  • Where did Ms. Weisser get her stats? The information in this article is full of errors. You would think that the Time staff could do better. Despite the errors, this author appears to have wanted to provide a balanced view.

    While Ms. Belling's axiom is correct, it is less than useful: “If you borrow the money now, you may not have it when you need it later on.” It is obvious she has little experience guiding individuals in difficult times. It is not the act of borrowing that creates problems for borrowers; it is the ill advised and less than judicious use of proceeds.

  • You failed to mention the worst part. The table of contents in the issue, has this article titled ” “Reverse Mortgages can be a trap for older Americans”

    How many seniors will never get beyond that title, and read the article? The article itself was not that bad. I certainly hope that NRMLA will write a response to address not only that horrible title, but also some of the misconceptions presented.

  • Reverse mortgages are fiscally irresponsible – period.

    Here's a challenge to all the spivs and floggers of reverse mortgages out there:

    Give me an example based on a REALISTIC loan (or maybe the average reverse mortgage stats in the USA)and prove to me that the discounted cashflow of the benefit taken over the loan term EXCEEDS the net present value of the total cost of the loan at the end of the loan term.

    Gee that known as a 'cost/benefit analysis' and in virtually 100% of reverse mortgages, the cost exceeds the benefit – that's the definiaition in my book of fiscall irresponsibility and they simply fail the test. They are ill-designed, ill-considered and inherently defective financial products.

    Those that recommend any financial product, including reverse mortgages, that fail this cost/benefit analyss should be sued by the dependants when the family home and their inheritance is lost forever.

  • Reverse mortgages are fiscally irresponsible – period.rnrnHere’s a challenge to all the spivs and floggers of reverse mortgages out there:rnrnGive me an example based on a REALISTIC loan (or maybe the average reverse mortgage stats in the USA)and prove to me that the discounted cashflow of the benefit taken over the loan term EXCEEDS the net present value of the total cost of the loan at the end of the loan term.rnrnGee that known as a ‘cost/benefit analysis’ and in virtually 100% of reverse mortgages, the cost exceeds the benefit – that’s the definiaition in my book of fiscall irresponsibility and they simply fail the test. They are ill-designed, ill-considered and inherently defective financial products.rnrnThose that recommend any financial product, including reverse mortgages, that fail this cost/benefit analyss should be sued by the dependants when the family home and their inheritance is lost forever.rnrn

string(83) "https://reversemortgagedaily.com/2009/07/15/time-magazine-reverse-mortgage-feature/"

Share your opinion