Bloomberg writer Alexis Leondis recently wrote about reverse mortgages and how the recent housing Bill may increase the number of reverse mortgages. The article points out that the new loan limits and the origination fee being capped should help increase the popularity of the program.
However, even with the cap on origination fees….. some people still consider reverse mortgages costs to be too high. “This is still a high-cost product and not one that should be someone’s first choice when looking for additional income,” said David Certner of the AARP. “Homeowners with a home value of $400,000 can now participate and will pay $6,000 in origination fees, instead of $8,000,” said Certner, who is based in Washington.
I’m starting to realize that even with protections which prohibit lenders from selling financial products, such as annuities, along with reverse mortgages, extend loan availability to cooperatives, and bar lender-paid counseling, some people will never be satisfied.
While Mr. Certner may still think there reverse mortgage fees are to high, I hope he realizes lowering the origination fee will only drive up the rate and end up costing the senior more money in the long run.