Reverse Mortgages

Update 1-20-2012:  According to this reply from an online real estate attorney, most of the reverse mortgages are non-recourse loans (e.g., they can't go after you for negative equity).  But you should verify that before signing up for a reverse mortgage.  Source:  http://weblogs.sun-sentinel.com/business/realestate/housekeys/blog/2012/01/ask_a_real_estate_pro_walking.html

Update 1-20-2012:  Reverse mortgages, once recently almost vanished, are coming back - please be careful to read and understand all pros and cons and seek help when you evaluate reverse mortgages.  Source:  http://online.wsj.com/article/SB10001424052970204542404577158990079313270.html?mod=djemRealEstate_h

6-25-2011:  Apparently, Wells Fargo is another lender (including Bank of America) that is getting out of reverse mortgages - Mainly due from falling property values and therefore the lender is unsure of total payout, whether or not it's supported by the final property value.  Note:  Funny how they protect their payout but some lenders can issue very risky loans when the Federal Government is there to buy them up.

5-23-2011: Visit the National Reverse Mortgage Loan Association for more information about reverse mortgages.

Note:  Reference to the NRMLA website in no way indicates my support or recommendation but for information purposes only.
 
4-28-2011: National Foundation for Credit Counseling (NFCC) is offering counseling for those homeowners who have reverse mortgages. NFCC's toll-free number (1-866-363-2227) is for homeowners to work with counselors on delinquent real estate taxes, property insurance, or any concern such as special assessments HOA fees, and others.

Source:  http://realtytimes.com/rtpages/20110428_free.htm

The new Consumer Financial Protection  Bureau (http://www.consumerfinance.gov/)  will now oversee reverse mortgage industry.

Most reverse mortgages are made under the Home Equity Conversion Mortgage (HECM) program since its inception in 1988.  They work this way:  a borrower who is at least 62 years of age and has paid most or all of their mortgage, receives regular monthly payments as advances against their equity.  They usually give better cash flow to those who are aged and need more cash to pay for living expenses.

It was once thought that reverse mortgage were safe for older people, but recent news regarding the AARP suing HUD for potential reverse mortgage foreclosure has raised some concerns - http://www.mortgagenewsdaily.com/03092011_reverse_mortgages.asp

Recently, Bank of America has stated their intent to get out of reverse mortgage loans because they are not profitable. (Especially under the current market of declining real estate values.)

Some advocates recommend reverse mortgages as a final option since it would make the individual's government assistance (including Medicare and harder time funding long term medical care.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.