Regulatory changes are aiming to make reverse mortgages safer, writes the Wall Street Journal in a report this week, cautioning that the loans are still not for everyone.
The changes are working to ensure borrowers can uphold their loan obligations and make it “harder for borrowers to dig themselves into a hole,” the WSJ writes.
“Used wisely, reverse mortgages enable older adults to tap the value of their homes without having to uproot themselves and sell,” the report states. “But experts warn retirees to tread carefully with these complicated loans. Used improperly, a reverse mortgage can leave a retiree broke and without a roof over his head.”
The WSJ spoke with elder law expert Bernard Krooks of Littman Krooks LLP who noted that reverse mortgages are more complicated than other types of loans, particularly forward mortgages.
AARP policy advisor Lori Trawinski also weight in noting that like any loan, a reverse mortgage comes with obligations that must be met.
“The important thing about these mortgages that people really need to remember is that they are loans, and as with any loans they come with a set of obligations,” Trawinski told the WSJ.
The decision to take a reverse mortgage should consider input from advisers, accountants and estate-planning attorneys, WSJ says, including an overall outlook on the borrower’s financial situation.
“While it can be a useful part of estate planning, it’s not for everyone,” Krooks said. “It shouldn’t be done without being looked at in terms of overall financial needs.”
Written by Elizabeth Ecker