The Los Angeles Times featured the so-called “new” reverse mortgage in its financial advice column over the weekend, describing the benefits but also offering several words of caution.
Liz Weston, a certified financial planner in Studio City, Calif., wrote that home equity conversion mortgages may be a good option in response to a nearly 90-year-old reader who asked whether the products were “too good to be true,” a common concern for many potential borrowers. Weston leads off the discussion by noting that HECMs previously “deserved their bad reputation,” but that recent changes — presumably the Financial Assessment and other tighter federal restrictions — have transformed them into a cheaper, less risky option.
Interestingly, despite the positive words, Weston also claimed that home equity lines of credit are typically better options for seniors, warning of the high fees associated with taking out a HECM. Weston closes her advice by laying out the counseling process, and raising the specter of potential scams.
“While reverse mortgages have improved, some of the people touting them have not,” Weston wrote. “Investment salespeople and scam artists sometimes try to push over people into reverse mortgages as a way to come up with cash to invest in their schemes.”
Read the full column in the Times here.
Written by Alex Spanko