“With great power comes great responsibility,” a Yahoo! column published this weekend begins. The column, which presents a “personal take” on the Consumer Financial Protection Bureau’s recent reverse mortgage report, addresses the forecasted prominence of reverse mortgage products and developments on the horizon that should lead to market growth.
Yahoo! contributor RJM Terrado writes:
“According to the CFPB’s report, reverse mortgage, popularly known as Home Equity Conversion Mortgage (HECM), has yet to reach the vast market of eligible senior homeowners. In 2010, only around 3 percent of the 24 million qualified senior homeowners availed the program averaging about 70 thousand newly originated reverse mortgages a year.
Some developments are, however, expected to change the trend.
Firstly, reverse mortgage-qualified baby boomers are growing in numbers. From the estimated 24 million in 2010, it is up to 32 million in 2012. That’s a 33 percent increase or additional 8 million qualified senior homeowners in two years.
Secondly, the report released by the Office of the Chief Actuary in May regarding the possibility that the Social Security Administration may not be able to live up to its promised benefits brought some chilling effect. Seniors, financial planners and even organizations into retirement research started looking for ways to prepare for the coming of this anxiety-causing event.
The third development is tied with the second one. After Social Security, home equity is the largest asset of a typical senior in the country. With the hope of addressing the Social Security’s pending deficit, a growing number of financial and retirement planners started looking at reverse mortgage closely and acknowledged its potential to boost retirement preparedness.
With attentions from the media and investment professionals, consumer protection concerns arise. It is from this phase that the CFPB’s report was conceived.”
Written by Elizabeth Ecker