Tags: Reverse mortgages | next generation | home | loans

NY Times: Reverse Mortgages Cause Problems for Next Generation

By    |   Thursday, 27 March 2014 06:14 PM

Reverse mortgages, advertised as a way for senior citizens to gain cash out of their home, are proving to be costly for the heirs of those who took out these mortgages, according to The New York Times.

In reverse mortgages, homeowners 62 and older can borrow money against the value of their homes. They don't have to pay back the loans until they move or die.

Federal law stipulates that lenders must offer survivors the choice of settling the loan for a portion of the full amount. But that's not happening, according to The Times.

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Rather, some heirs are being threatened with foreclosure unless they pay the mortgages in full, according to The Times' extensive interviews with housing counselors, state regulators and families in which parents opted for reverse mortgages.

There's no formal statistics on how many heirs confront foreclosure on reverse mortgages, according to The Times. But its research indicates that tens of thousands of people are ensnared in the problem.

"It’s truly one of the thorniest issues I hear about from a growing number of attorneys," Diane Thompson, a lawyer at the National Consumer Law Center, told the paper.

Some experts say reverse mortgages have their place, but borrowers must be careful.

"Reverse mortgages are a useful tool for some people," Lori Trawinski, senior strategic policy advisor with the AARP Public Policy Institute, told CNBC.com. "They can enable retirees to age in place, but we always emphasize that these are loans, and as such, borrowers have obligations."

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Reverse mortgages, advertised as a way for senior citizens to gain cash out of their home, are proving to be costly for the heirs of those who took out these mortgages, according to The New York Times.
Reverse mortgages,next generation,home,loans
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2014-14-27
Thursday, 27 March 2014 06:14 PM
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