It is to be understood that although there are no monthly payments, a reverse mortgage is a loan with interest that must eventually be paid back.

However there are a couple errors or misunderstanding of facts if your article. You say that interest rates on a reverse mortgage “the interest is much higher.” This is actually typically untrue. The HECM, which is the FHA-insured loan, rates have been much much LOWER than traditional HELOCs. Reverse mortgage rates on the HECM (which is about 90% of all reverse mortgages) have been hovering between 3-4% over the last year. There are no conventional or HELOC loans with that low of rates these days. In some cases in fact if the appreciation of your home outpaces your interest rate on your reverse, you still gain equity in the home (granted at a much slower pace).

And for clarity one of the reasons the upfront fees are high is because of the 2% FHA insurance required on the loan and the 2% origination fee which is quite typical for HECMs. The fees for a jumbo tend to be far less because they don’t require the 2% insurance and often the origination is lower than 2%. The other fees are typical closing costs for all mortgages.

Also you make mention of having to pay Home Owners Insurance and taxes. This is true of all mortgage programs, it comes with home ownership. You retaining ownership of your home is a benefit of the reverse mortgage. We don’t take the house. You also make mention of foreclosure as a warning sign. The number of foreclosures on reverse mortgages is nearly zero. The lender makes every effort to make sure you remain in your house because after all that was the point of the reverse in the first place.

Reverse mortgages are getting a bad rap due to a few bad apple insurance agents and financial advisors selling investment products after the fact and the public must understand that reverse mortgages and financial products are not interconnected and are completely independent of each other.

I like your alternative campaign slogan: Obama! BS we can believe in!

Keep up the good work.
The Prospector

You might want to save a copy of the PDF file. It will probably be revised when word gets out.

I don’t know about the next guy (or gal), but I’d just as soon look after myself. I have every incentive to do a GOOD job of doing so, unlike a bureaucrat in some alphabet-soup government agency, who gets paid whether he (or she) does a good job or not.

I’m taking your advice. If you count on the gov’t for anything expect to be dissappointed.