Business Week is reporting that with big losses to retirement savings as a result of the financial crisis has stoked interest in reverse mortgages among younger retirees of both sexes.
According to the article, over the last 22 years, 637,000 of the Federal Housing Administration’s reverse mortgage program have been endorsed through the end of July 2010. That represents roughly 7.2 percent of the 6,933,404 owner-occupied housing units for people age 65 and older recorded by a U.S. Census Bureau survey in 2008. HECMs, which are insured by the Federal Housing Administration (FHA), are now roughly 99 percent of the reverse-mortgage market.
“It’s viewed even now as a niche product that people only make use of in desperation,” says Anthony Webb, research economist at the Center for Retirement Research at Boston College. “Given the inadequacy of retirement savings, it really is something that everyone ought to be thinking about, even if in the end they choose not to take advantage of it.”
According to Jim Heitman, an independent, fee-only financial adviser in Alta Loma, Calif., clients interest in reverse mortgages has jumped up big in the last few years. “When I introduce the topic, I need to do a lot less educating as to what that is than I used to,” he says.
Boomers’ Shrunken 401(k)s Spark Interest in Reverse Mortgages