Tags: MarketWatch | Reverse | Mortgages | Reputation

MarketWatch: Reverse Mortgages May Regain Respectability

By    |   Monday, 23 Dec 2013 08:07 PM

There is a stigma attached to reverse mortgages. Many people equate them with failing their children and heirs. But that may change in coming years, according to MarketWatch.

There are multiple factors in play that could make reverse mortgages a more common practice, said MarketWatch columnist Amy Hoak.

“As people live longer due to medical advances, more of them may need to get at their home equity to pay for their medical costs,” she wrote.

Editor’s Note: Seniors Scoop Up Unclaimed $20,500 Checks? (See If You Qualify)

“Also relevant is that many Americans near retirement age have a considerable amount of wealth in housing equity; 25% of all wealth was held in the form of home equity in 2011, according to the U.S. Census Bureau.”

Colin Cushman, CEO of Generation Mortgage, a reverse mortgage lender, and former director of portfolio analysis for the Federal Housing Administration (FHA), predicted reverse mortgages could become regarded as an element of Americans’ investment portfolios.

For instance, he said homeowners might draw on their home equity through a reverse mortgage when the stock market is in decline, and then pay the funds back in time catch a rising market.

Peter H. Bell, CEO of the National Reverse Mortgage Lenders Association, told MarketWatch that reverse mortgages can help consumers avoid taking money from certificates of deposit before they mature, or from having to sell stocks in a downward cycle.

The FHA reported that only 60,091 reverse mortgages were originated in the U.S. during the 2013 fiscal year.

Inman News, an industry site for realtors and brokers, suggested that real estate professionals should be fully informed on the potential pitfalls of reverse mortgages before recommending them to clients.

“Reverse mortgages have gained a reputation as being dangerous tools that can cost someone
heir property or that can be used to scam unsuspecting seniors,” wrote Inman News guest contributor Bernice Ross.

However, she said reverse mortgages can be a benefit under certain circumstances for struggling senior citizens who would not be able to stay in their homes otherwise.

Ross said there are also scenarios under which a reverse mortgage can be used by senior citizens to buy a new home.

Editor’s Note: Seniors Scoop Up Unclaimed $20,500 Checks? (See If You Qualify)

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