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Wealth Management: Are Reverse Mortgages Planning a Comeback?

Reverse mortgage volume has fallen sharply since its heyday prior to the housing market downturn, but several developments in recent years may position these loans for a comeback, says a recent article from Wealth Management.

“Reforms put in place by the federal government several years ago have led the reverse lending industry to target more affluent potential borrowers—the households that tend to work with planners,” states the article. “And some retirement researchers have been making the case that planners should revisit Home Equity Conversion Mortgages (HECMs) as a key component of client retirement plans.”

But even with the new program changes, some argue that HECM reforms create barriers for both affluent households and those with limited means.

“The truth is, HECMs became more restrictive and expensive—they are worse overall, period,” says Michael Kitces, director of research for Maryland-based Pinnacle Advisory Group, in the article. “The new rules reduce access for people with limited means, but it’s also not a great-looking deal for the affluent.”

Read the full Wealth Management article here.

Written by Jason Oliva