Reverse Mortgage Performance is Good Despite the Rumors

While many reports have not shined favorably on the mortgage industry, there is some good news coming forth regarding reverse mortgages. They are doing well, in fact the final numbers rolled out earlier this month from the end of 2010. Believe it or not, there was more than $3 trillion in home equity loans being held by seniors, age 62 and up. When you look at the country’s overall financial picture, it really isn’t all that hard to understand, but it’s sad that seniors are carrying that burden. However, the good part is how the reverse loans are structured, giving them money back in exchange for the property. 

Seniors Make a Sacrifice, but They do Better Financially 

Reverse mortgages enable senior citizens to let go of their home in the end, in return for signing up for a mortgage that makes payments to them. While values are a bone of contention in real estate circles, seniors have fared well in getting these loans closed. There is plenty of counseling upfront to ensure that they understand what is involved, and their family members or caretakers are encouraged to learn about the programs as well so that they can be of assistance should the need arise. While the children might fear they won’t get the property, in some cases it might be the best thing for their parents. This is especially true at a time when values are going down, and there may not be much of a profit regardless on the home. Making the equity work for them is what it’s all about, and it’s doing well.

AARP Sues HUD

Foreclosing on those who are widows or widowers sounds pretty cruel, but it happened when HUD foreclosed on surviving spouses. The case was made due to the fact that there were rules that were established long ago regarding foreclosing on those who had lost their spouses. Isn’t the idea to keep them in their home and not kicking them out of it?


The choice of defense is AARP’s department of litigation, and in this case the HUD secretary is the defendant. The central issue of the case is in fact that there are long standing rules that state that it is illegal to foreclose on surviving spouses. The deeper issue is that those who would typically have an interest in the property can’t even make a dent in buying the home because the values are so skewed.

With homes losing value, and sales slowing down, it doesn’t leave anyone in a good position. This situation is really hard to overcome, but not all foreclosure cases are created equal. There are still many cases in which no one wants to take on the property regardless simply because it is more of a chore than a benefit.

Hopefully, these individuals will be able to stay in their homes as a result of the final ruling, but there is no way to know for sure. With so many homes underwater, it could justify these individuals keeping their homes simply because reverse mortgages were designed specifically for those age 62 and over, and this situation doesn’t add up to what the program really is all about. No wonder so many are confused about what is happening.

-Mayer Dallal

The Reverse Mortgage Dilemma

A little birdie told me that reverse mortgages might be in trouble, but I am not sure exactly what this means. Reverse mortgages weren’t following in the same footsteps as other mortgage loans, and I certainly wouldn’t begin to group them together. While I don’t do them, I know what they are, and I guess I don’t really see them as “harmful”.


A reverse mortgage essentially pays someone to have a mortgage, acting as “income” for the borrower. The catch? The property would be relinquished to the bank upon the death of the homeowner or sale of the home. These loans are aimed at senior citizens, and aren’t really designed to set someone up for default. There are specific stipulations that must be met in order for a reverse mortgage to be done, and the guidelines are anything but the “standard”.

Reverse mortgages were meant for good, not for bad; while they do have that “catch”, I would have to say that most senior citizens across America aren’t in a stable financial position. Sure, many I know have homes that are paid in full, and don’t have all this credit card debt that younger generations have; well some of them anyhow.

Seniors tend to have higher medical bills, and more medications as they age, so this is where the reverse mortgage comes in. This was designed to generate additional income out of the equity they had established in their home. It sounds ideal, but is it? I guess that is what everyone is asking these days, and while I don’t have all the details, I would hate to see a life boat taken out from under a senior citizen. I guess there is no perfect solution to any of this, but just when healthcare is getting ready to change, taking away one of the very few life lines seniors have could be detrimental.

-Mayer Dallal