NCOA to Congress: Take Note of a New Trend in Reverse Mortgage Borrowers

While some lenders are now marketing to the reverse mortgage borrower who is not looking for a long-term financial fix, some industry affiliates are also beginning to note the potential for a new type of borrower to emerge.

During a Congressional hearing last week, a National Council on Aging representative spoke of the “new trend” toward using home equity for shorter term cash shortfalls.

“Reverse mortgage borrowers are at the leading edge of a new trend to use home equity to deal with cash shortfalls,” said NCOA’s Barb Stucki, in testimony before a subcommittee of the House Financial Services Committee. “The reverse mortgage marketplace is very dynamic and must be understood within the broader perspective of our nation’s current housing and economic situation.”


NCOA counseling sessions have indicated a shift toward solving short term debt rather than enhancing lifestyle, Stucki said, with only 27% of borrowers today using reverse mortgages for the latter purpose. 

The consequences of the shift is still unclear, however. 

“On one hand, as the Baby Boomer generation ages, reverse mortgages may be part of a growing trend to include home equity as part of retirement planning,” Stucki said. “For some older homeowners, orderly liquidation of home equity could be a better option to sustain community living than preserving this asset for financial emergencies. On the other hand, using a reverse mortgage to address income shortfalls can also increase financial risks if borrowers do not manage their spending or if they rapidly draw down their home equity.” 

Written by Elizabeth Ecker

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  • Huh???  Maybe this or maybe that or maybe not at all.  Such thinking is exactly why the FIT report should be abandoned.
    Spending should be a real concern but where is a detailed budget to look at to help the counselee realize how to get a handle on their poor spending HABITS?  The nonsense that passes as a budget in the FIT report is nothing more than a confusing and misleading document.

  • The Cynic makes a lot of sense in the comment made, I have to agree in most part. However, there are other factor’s involved with the younger and even more mature seniors looking at short term VS long term.

    People in general are afraid of the uncertainty in the economy, this is creating a change in thinking. Also, over the past ten years, debt in the hand’s of the American people have been at the highest levels in the history of our country!

    What does this mean, many baby boomers borrowed and borrowed from 1999 right up to the 2008 crash. They borrowed for many things, investments, luxury items, to live beyond there means ETC.

    Because of this many people in there early and mid 60’s and older have accumulated a lot of debt. Many of them have lost their retirement plans and their jobs. Consequently, many of the the younger seniors have gotten themselves in a pickle and are resorting to reverse mortgages to get them out of their short term dilemma’s. This is also the case with many mature seniors as well!

    Sad but true!!!

    John A. Smaldone

    • Excellent points!!
      RMs have finally become financial tools applicable to both
      long and short term solutions. It is just reality and as indicated a consequence of many factors. Question for congress: what would the landscape look like without the product? I dont think many politicians would like the answer! What alternative solutions are there for folks entering retirement with higher debt burden than prevoius generations, with huge uncertainties regarding the durability of social security benefits, with retirement plans that have not recovered and who iether want to stay in their home or cant even downsize because of home values crisis?

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