CNBC’s Suze Orman Expects to See More Reverse Mortgages

Celebrity financial adviser Suze Orman said she expects reverse mortgages “to become increasingly popular,” in a column this week at

In her column titled “Reverse Mortgages: Know the Risks and Rewards,” Orman presents advice regarding reverse mortgages, explaining the pros and cons. In an excerpt from her new book, she says, “In the coming years I expect reverse mortgages to become increasingly popular among retirees who are eager to find extra income.”

She cites the economic downturn as reason for a growing number of eligible borrowers who have sought advice about reverse mortgages. “Yields on bank and credit union deposits, as well as short-term Treasury bills, are below 2%. It’s hard to make ends meet with that paltry payout.”


In her advice, however, Orman stresses the importance of understanding the taxes and insurance payments borrowers need to make. “It is very important to understand that after you take out a reverse mortgage you will still be responsible for paying the property tax, the insurance premium, and all the maintenance costs for your home. If you can’t continue to cover those costs you will risk losing your home to foreclosure,” she writes. “I ask every retiree—and the grown children of retirees who are looking out for the best interests of their parents—to be very carefuI.”

In the past, Orman has discussed the option of a reverse mortgage for those whose investments lost value as a result of the recession.

View Suze Orman’s article on

Written by Elizabeth Ecker

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  • Like most articles of this nature, there is little concept of financial planning or cash management in what Ms. Orman presents. This is a very poor picture of what HECMs can be especially to more affluent seniors.

    Articles like this zero in on just one cohort of seniors, the cash short and quasi house rich. While that is good, it is also skewed. As HECM lenders we help this cohort of seniors each and every day but this loan was designed to be far more than one strictly limited to this one cohort.

    Who should be considering the Saver are those more affluent seniors with fluctuating income or those with temporary cash needs who would benefit from the unique features of an adjustable rate HECM. These seniors are active and at the same time financially astute enough to understand that not paying down a mortgage generally means its balance due will grow.

    Ms. Orman has read and heard far too much of our older marketing information. She does not seem to understand the difference between loan proceeds and income. If she did, she would have said that there are generally no tax consequences to loan proceeds at the time of receipt.

    Overall the article by Ms. Orman ranks as a 6 out of 10. As to its warnings about the requirement to keep taxes, insurance, and other home costs current, it deserves an 8 out of 10.

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