For the past week CNN has been actively promoting reverse mortgages during their programming. I have access to their transcripts through Dow Jones and they continue to report on how they can help seniors who are struggling right now. Unfortunately, I’ve been unable to find any of the videos online but below is a transcript of the feature today.
Also, CNN’s American Morning homepage has been displaying links to reverse mortgage information for the past week. These links could have been here for a while but it’s the first time I’ve seen them. It’s good to see a major news outlet like CNN promoting reverse mortgages more.
Transcript from CNN:
COLLINS: In these tough economic times, many retired people are feeling the pinch and deciding to cash in on their homes using something called a reverse mortgage.
Christine Romans explains an advice that’s "Right on Your Money."
ROMANS (voice over): The AARP says nearly 60 percent of its members are having a harder time paying for basics like groceries and medicine.
Personal finance expert, Eric Tyson, says that’s why reverse mortgages are so appealing.
ERIC TYSON, "PERSONAL FINANCE FOR DUMMIES": They are filling a need in the marketplace because there are seniors who get the retirement and that are house rich and cash poor.
ROMANS: Reverse mortgages let homeowners 62 or older tap a portion of their equity in monthly or lump sum payments. The loan does not have to be paid off until the home is sold.
TYSON: It can make the different between, you know, being able to do repairs on the home or, you know, do some traveling or meet other out-of-pocket expenses that otherwise a senior might not be able to pay.
ROMANS: The government reports reverse mortgages more than doubled from 2001 to 2005 thanks to the housing relief bill. They’re expected to get even more popular. The new law caps origination fees and increases the maximum eligible home value for FHA insured reverse mortgages.
Still, Tyson warns these loans should be considered a last resort.
TYSON: If you end up only using the reverse mortgage for a few years and then selling the home fairly quickly, the effective interest rate that you’re going to pay could easily be a double-digit rate.
ROMANS: Christine Romans, CNN, New York.
While I don’t agree with Tyson’s last resort comment it’s still a positive segment.