The Chicago Tribune reports on the pros and cons of reverse mortgages, stating that the 500,000 homes with reverse mortgages can be seen as a good thing or a bad thing—depending on whom you ask.
“To housing advocates, the loans for seniors age 62 and up are little better than those found in the subprime housing market, with egregiously high fees and aggressive marketing tactics,” the article states. “To others, from lenders to mortgage counselors and many seniors themselves, they can be a lifeline of ready cash to help fund retirement.”
The Tribune points to HUD’s call for delinquent property reporting, due in February, and quotes National Council on Aging VP Barbara Stucki as saying many seniors with reverse mortgages don’t fully understand the obligations of the loans.
“For seniors in certain situations, however, it can be a good, if last, resort,” says the Tribune. “Borrowers receive their payments for as long as they stay in their home. If borrowers live beyond their life expectancy established at the time of the loan agreement, the bank (or its insurer) takes the loss.”
Finally, the article refers to the lawsuit filed recently by AARP against the Department of Housing and Urban Development, which alleges that some reverse mortgage borrowers are currently facing foreclosure on their homes because of changes to the program that took place in 2008.
View the entire article.
Written by Elizabeth Ecker