N.Y. Times: Family-Style Reverse Mortgages

A loan product that essentially functions as a family-funded reverse mortgage has garnered considerable press in the weeks since its launch. And now, The New York Times is the latest to spotlight what is being called “The Caregiver Mortgage.”

How it works is family members get together to crowd fund a line of credit against the equity in their parents’ home, allowing them to receive tax-free cash at a flexible disbursement rate negotiated between the family lenders and the parent accessing the funds.

The product is the latest loan offering from National Family Mortgage, an online peer-to-peer mortgage lender. The Boston-area company has historically provided loans that offer the inverse, typically loans funded by parents lending to their adult children.

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That is, until May 1, when it decided to launch The Caregiver Mortgage in response to growing demand from existing clients, National Family mortgage CEO Tim Burke told RMD earlier this month

The Caregiver Mortgage offers many of the features and benefits that attract borrowers to reverse mortgages, but without the same costs and restrictions that accompany federally-insured Home Equity Conversion Mortgages. 

But some argue there are other options potential borrowers should consider first before opting into the family-funded loan, including downsizing or taking a home equity line of credit.

Read The New York Times article.

Written by Jason Oliva

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  • I don’t know very many children or family members that consider themselves a bank and have the extra funds to fund their parents retirement. Seems like a very nitchy product with a very small pool of borrowers that can actually manage to fund this kind of loan. Another great idea that has little to no chance to be a long term fix to retirement problems facing our retiring population.

    • RM Guy,

      I found this sentence rather odd: “Seems like a very nitchy product with a very small pool of borrowers that can actually manage to fund this kind of loan.” I have no idea what nitchy is but perhaps you are trying to come up with some derivative of niche.

      But what does a very small pool of borrowers have to do with funding a loan? Perhaps you meant investors which is generally an entirely different group of people.

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