Reverse mortgages: The final blow killing middle class wealth

[LongTomH]

From Daily Kos: Reverse mortgages: The final blow killing middle class wealth. You've seen those commercials with Fred Thompson extolling the advantages of a 'reverse mortgage' to finance your retirement. Were you as skeptical as I am?

Many fellow Americans that have worked their entire lives, weathered several recessions and depressions, put their children through school, helped many in need, and faithfully paid their mortgages for decades are now being taken advantage of once again. Most have followed all the rules necessary to be considered fiscally responsible, yet because of "legal fraud" by the financial sector and policies effected by purchased politicians, their years in retirement will be compromised.

The Plutocracy, the one percent has walked away with a large percentage of their 401Ks, their SEPs, and to some extent their financial security. Because of stagnant or falling real wages, much of the working middle class have maxed out on their credit in the attempt to maintain their standard of living. For a Plutocracy that feeds on perpetual growth, from where will it feed now? An old and well-crafted financial instrument known as the reverse mortgage is being marketed on steroids to a baby boomer population.

...........//snip

Most Americans amass most of their wealth within their homes. Each generation in a responsible family is better off when the previous generation wills their assets forward. Reverse mortgages are yet another financial instrument that stunts the growth of the middle class by encouraging home owners to extract the capital out of their homes and use it as a supplement to their retirement or to simply splurge. Inasmuch as most reverse mortgages are federally regulated, their upfront costs are very high. These costs amount to free cash for the bank and mortgage insurance companies, your money transferred to them for a marginal service.

The big dirty secret is that reverse mortgages, like student loans pre-Obama, are nothing but a no-risk gift to the bankers, a wealth transfer engine from the masses to a select few. When the "owner" of the home dies, the government pays the bank any difference between the amount owed (interest plus principal) less the sale price of the home. If the heirs want to keep the home, they must pay the loan off in full. If the amount owed is more than the value of the home, the heirs must pay 95 percent of what is owed to the bank with the government paying the rest. What is the reason for the bank being in the transaction? It is there simply to extract from the government and the homeowner. They have absolutely nothing at risk for the profits they make.

Reverse mortgages mask a systemic problem that affects the American worker, a backward and inhumane retirement system. Every American worker makes a vibrant economy possible by providing 40, 50 or more years of work, taxes, and spending. It is appalling that a worker is incapable of having Social Security capable of providing a decent living. No one should have to deplete all of their assets to survive.

[Silver_Witch]

1. This practice should be illegal

It is a sham and acdime!

[Warpy]

2. While it will allow some people with lousy retirements to travel

and then meet health expenses not covered by Medicare, it will also mean that they won't have their largest asset to leave to their children. The impoverishment of the country will be complete and their children will be fundless, landless, rootless, powerless, and in debt.

Just the way they want us.

If your children are struggling as hard as most are out there, between college loans and low wages, please think carefully before you use your house as your ATM one last time.

I'm an old Boomer and we got Medicare just in time, that's the only reason our parents had anything to leave us. Failing to scam them out of their property through massive medical bills, the plutocracy had to come up with something else. Holding wages down for 40+ years and then giving us such a kind offer to buy us out of our only real asset at the end to save us from extreme poverty in old age was the perfect way.

[puffy socks]

3. +1000

[PasadenaTrudy]

4. Glad I didn't have kids! n/t

[yeoman6987]

9. I wanted my parents to spend every penny they had

Grown kids don't need mommy and daddy leaving them anything especially if the parents are not enjoying their retirement. Go on a world cruise. Spend it all. I would hope everyone agrees with me.

[Warpy]

13. I would hope more people face the reality of what's been done to us

While your attitude is laudable in some areas, the New Deal that gave us a fair break was dismantled a long time ago and kids growing up now didn't have many advantages. Most college grads now have something called student debt and it is crushing them. Those who didn't go into debt to get an education are stuck in low wage work, often below the poverty level. So don't presume to lecture anyone on that account.

I wanted my parents to blow a lot more money than they did. However, they knew how expensive their care could get before the end and they didn't. It had nothing to do with me and everything to do with the spectre of what nursing home care costs.

Horatio Alger was killed stone dead by a series of Republican and conservative Democratic administrations. Kids are moving back home now because they can't make it out there in the country Cheap Labor Conservatives have made for us.

Forget about going west, young man. Have you checked out California housing costs?

[yeoman6987]

15. I agree with a lot of what you said

I also believe that SOME parents live in substandard retirement lifestyle to leave money to the kids. There definitely is a happy medium.

[mindfulNJ]

82. MY parents took a reverse mortgage out in their late 70s

to pay off a a debt from my ne'er do well sister, have a nest egg, and to do some badly needed home improvements. They are in their 80s now and are able to stay in their home, and none of us kids want the house anyway after they are gone. I'd rather THEY enjoy the fruits of their own labor. Why should my aforementioned sister benefit from it? They were very happy it was an option for them.

[Warpy]

84. Sounds like you're a Boomer

Kids who came after us have had a much tougher time.

People need to think very seriously about this.

[lancer78]

23. I wouldn't go on a world cruise

and would rather leave my money to my heirs. Want is the point of taking a world cruise? A memory that will be nothing but worm food 10 years later.

[mythology]

55. It's not just a memory, it's an experience

Your logic, if taken to its logical conclusion is that any dollar spent on more than mere sustenance is wasted as it could have been saved and passed down. I'd rather have seen the Eiffel Tower, the Great Wall, the view from the top of Mount Whitney than saving that money to pass it on to any future kids I may have.

Living a life without travel, without experiences, isn't really a full complete life in my opinion. It's an existence.

[lancer78]

56. Well, we differ.

I would rather use that money to help my kids, or set up a charity for kids in poverty to go to college than an experience that noone will care about except maybe me.

[yeoman6987]

60. Oh goodness

If everyone stayed in their little community, nobody would learn different cultures.

[lancer78]

85. Maybe since i grew up playing MMORPGs

with people all over the world, I have been exposed to many different cultures. I also found a small, local kendo (japanese fencing) school to join. May 5 white guys out of 25 total people. The rest were either japanese, korean, or taiwanese.

Just because someone doesn't travel does not mean they are totally ignorant of other cultures.

[qnr]

24. Well, I can see what you are saying; however, I'm 58, my youngest is 3.

We're on a fixed income and already struggling. If I were to die any time soon, there is no way that my wife or kids could make it.

[snooper2]

66. Damn, and we were giving one of our co-workers a hard time for having another kid at 42 LOL

We were giving him shit like- Damn! You are going to be 60 at her high school graduation! They will be calling you grandpa instead of pa

[qnr]

74. Yeah - it's going to be interesting. Just going to have to keep in shape :D n/t

[A HERETIC I AM]

69. Then you need life insurance. n/t

[qnr]

75. That is so true. n/t

[jtuck004]

49. Keep or spend. Some of us, perhaps 1%, do not make a choice. They get it all.

One of the ways the wealthy will make sure they and their kids can fuck over you and your kids is by passing on more wealth than your kid will earn in a lifetime to their kid. Or kids.

And they get to take the world cruise anyway.



Not judging, but I wouldn't give the proceeds of the home I invested in for 30 years to the shareholders of some floating toilet of a cruise line.

What we do for ourselves doesn't mean much. It's what we do for others that outlasts us. But more than that, it fights that first thing I mentioned in ways nothing else will.

Enjoy the cruise, though. If you can, go to Athens. There was an amusement park near there, and a broad walkway downtown, lots of amazing people. Go see the ancient places, cities where they had it all and still couldn't get along.

If you drink too much Ouzo it's best to have a ship in the harbor to sleep on. And a Dr. nearby.

[csziggy]

58. My parents' generation were able to send their children to college

And still pay off their mortgages so they could leave their children educated, debt free, and with a small inheritance.

Over the last 40 years, wages have been stagnant, educations costs have gone up, retirement funds have been sucked dry, and mortgages have been structured so many can't keep up or ever pay them off. That means at least one generation, now going into two, have left their children in debt and/or under educated.

Jobs for college graduates don't pay as much as they used to so the newly graduated can't pay their debts - if they can get a job at all that justify their degrees. Until the ACA passed, many children had to help their parents with medical costs.

Since their retirement funds - if they ever existed - were depleted in the stock market crash, parents have had to take money out of their homes, go into further debt and have nothing left to leave their children or to help pay those college debts. Social Security is not enough to live on which makes things even worse.

I know no one who is able to "enjoy their retirement" or go on a world cruise other than a very few individuals who inherited money from their families and have managed to hold onto it by not having children. The rest are living from one Social Security check to the next, can't afford transportation, can't afford to help their children and will not have anything left to leave their children other than funeral expenses.

[paparush]

65. I'm 49. We had one son.

He will graduate from the University of North Carolina at Chapel Hill next year with dual degrees in Physics and Mathematics. He will graduate with zero debt. He has a small, needs-based, academic scholarship. Other than that, my wife and I have paid every cent of his education with no help from grandparents, trust funds, or inheritance. Similarly, our primary home is paid for. We were both social workers for a long time and drove simple cars and lived in small houses. We knew we would never be rich by American standards, so we chose to have one child. We scrimped and saved and as our son got older, took him on vacations to Belize, Guatamala, Morocco, Spain, Peru, and Nicaragua; no package tours, rather Lonely Planet, backpacker style. As I write this, he's now 21 and traveling through Ireland with his girlfriend.


We avoided the housing bubble in the mid 2000's. We never took out an ARM. We never used our home as a piggy bank. I am so thankful that we focused on living within our means and avoided the pitfalls of the imagined trappings of wealth.

I'm anxious about our son entering the workforce. I don't know what opportunities will be available to him.

[csziggy]

68. You lived like our parents' generations

"We focused on living within our means and avoided the pitfalls of the imagined trappings of wealth."

That's one of the keys. My Dad worked in a very cyclical industry. Some years he made a lot of money, others less than poverty wages. We always lived as if he was barely making enough to survive. My Mom mostly stayed at home, but she worked for about ten years when money was really tight.

Mom bought many of our clothes from Goodwill. We each got two pairs of new shoes a year - one for Easter and a pair of sneakers for school. We seldom bought books - but we visited the public library once a week. Vacations (if we got one) were trips to relatives where we camped out where ever they could make a space.

I am 15 years older than you are (and my Mom is now 95). You made wiser choices than most of your generation. My parents did what they had been raised to do by parents who had to survive through the Depression - while they had to pinch pennies it was during a more prosperous period than we live in now.

[kcr]

71. Yeah, the jet setting generation.

Everyone was flying all over the world on back packing trips.

[kcr]

70. Rich by American standards?

I grew up in a solid middle class upbringing, we were hard working people who lived within our means, and didn't know anyone who went to multiple countries on vacation. I'm not talking sans package deals. I'm talking not at all. Flying overseas is ridiculously expensive. We took road trips.

[paparush]

80. So did my wife and I when we were kids.

A big vacation when we were young was piling in the car and driving to the beach. We wanted more for our son. So, as I said, we scrimped and saved and made international travel a higher priority than new cars, a huge house, tons of new clothes and appliances, etc. We wanted to expose our son to some of the less developed nations, to reinforce how much we did have as US citizens.

[kcr]

81. Scrimping and saving doesn't create more money.

Your implication that anyone can do these extravagant things if they just scrimp and save is ridiculous.

[exboyfil]

78. One of the keys of that statement is

one son. I have two daughters, and one has already completed her B.S. in Mechanical Engineering with no debt, and the other is working on completing her B.S. Nursing next year with no debt.

For larger families it is definitely more difficult. We do live in a nice community (in one of the least expensive homes). My wife does not work outside the home. I am an engineer. We drive 2002 and 2009 cars.

I do like your concept of travel, but I have never done it (my wife has never been out of the U.S.). I have only been to Mexico, Canada, and Germany once (for business). I don't ever see us having enough money to travel like that. My wife and I did take an inexpensive trip to Hawaii (it can be done with credit card points and a deal on a condo).

My daughters did grow up going to lots of museums, zoos, and aquariums.

[malaise]

25. No rational person should take out a loan

on a house that is mortgage free - not after a certain age.

[Warpy]

26. It would make a great deal of sense for me if I needed the money

because I have no family left and Doctors Without Borders will get everything I leave behind.

People who have children, especially if they're struggling like most are, need to think very carefully about losing the one major asset they have to leave them.

[malaise]

35. I should have stressed with children

although some folks genuinely believe their kids should get their own.

[DirkGently]

28. Unless they need the money?

The problem is that middle class people no longer have enough wealth to live out their lives in security. Social Security is not enough, 401Ks ride the roller coaster of our unregulated market, and wages haven't kept up with inflation (or corporate profits).

But rational? To burn that last scrap of accumulated value in order to have enough money to live?

I can completely understand why people would do it. It's the fact that they would need to after working their entire lives that is so wrong.

[bulloney]

29. I've always said reverse mortgages would ultimately worsen the concentration of wealth.

As mentioned earlier, the value of a home would be at least an inheritance parents can leave their children. If they use a reverse mortgage, the banks end up with the wealth and the children will get little or nothing when the parents pass away.

[REP]

30. It also allows them to live, pay bills, etc

My mother took out a reverse mortgage on her house. I didn't care about inheriting it; I own a more valuable house in another state and I wanted my mother to live comfortably and independently. She died unexpectedly shortly into the the reverse and I was able to pay it off, so I got the house anyway and my mother was able to live her final years well.

There is a shit ton of counseling th borrower must go through be taking out the reverse. If the borrower reads through everything and understands what s/he is signing, it can be a good option. I have no children and no family members I wish to make rich; given what my house is worth today, a reverse could be a good option for me.

[Warpy]

32. It's Hobson's choice

and I'm asking people to think very carefully about it.

You didn't need it. Too many kids out there do.

[Gormy Cuss]

40. ^^This is how they were intended to work. ^^

They would allow cash-poor seniors to stay in the homes they've long owned rather than be forced to sell and move (an added stress for many.)

Reverse mortgage regulations may need some tweaking but the basic idea is sound.

And for people who want their kids to inherit, they need to pay the price to transfer the asset while they're still alive, healthy, and competent and maintain a life estate. The problem is, most people won't do this for a host of reasons.

[Lamonte]

67. Reverse Mortgages.

We have no children. We live in a $450,000 view condo 2 bed 2 bath, great home not far from Waikiki. The RM allowed us to move to a place we never dreamed of. We put down 120k to create instant equity and have never paid any money to the mortgage. Eleven years so far. Rental for a unit like ours is $2,500 a month. In other words the cost to rent here for 11 years is $330,000. I think we have covered that 120K. I have three other friends with Reverse Mortgages. The bank makes bigger profits from the people that die quickly, but in our case it is the best deal ever. Any questions?

[citood]

76. "Any questions?"

Yes,

Are you still responsible for paying the property insurance and property taxes?

And, I'm trying to figure out what the bank gets out of this...doing a reverse mortgage with less than 30% equity. My 'back of the envelope' calculations show that they anticipated your demise in no more than 10 years...which obviously hasn't happened. Do they ask your age? Is there a minimum age?

Thanks.

[Warpy]

77. Yeah. What do you do when the equity is paid off and you're not dead yet?

You're far away from cheap areas on the mainland and Hawaii rents, high now, will kill you.

[JNelson6563]

5. This is quite a shrewd move, wiley bastards.

They make me wish here really was a hell.

[Hoyt]

6. Like Payday Loans, people are usually stupid - and desperate - to use a Reverse Mortgage; however,

what if people really need the money and want to stay in their house but can't qualify for a 2nd Mortgage, public assistance, etc.

While I understand the reaction to just outlaw these type loans, what about someone who truly needs the money and have nowhere else to go. At a minimum, I'd like to see some requirement that the applicant has to see a video on the cons of these loans, would like to see Elizabeth Warren produce that video.

I generally think these lenders are preying on people, but these type loans do have considerable risks and are going to be costly to anyone who takes out the loan.

[awoke_in_2003]

7. and even more...

the bank collects interest from the mortgage of the new owner of the home.

[Wellstone ruled]

8. Ran accross this little bit last summer

while visiting our Trump supporter relatives in the Midwest. The latest feel good thing from the Rethugs bag of garbage is,well,it your kids don't have their butts covered by the time they are Forty,screw them,they will have to figure it out on their own. I am going to spend all my retirement on me myself and I. And yes they did a reverse mortgage and zero nadda in their estate will be passed forward.

Have to say this,they just do not get it,and to think we were dirt poor as kids and promised each other to never let this happen to our families.

[yeoman6987]

10. I am sorry but I have seen retirees eat speghetti-o's

And never go anywhere just to leave their kids money. I say, NO! If you love your parents tell them to enjoy the time they have left. No time to be selfish.

[Wellstone ruled]

27. Did Senior

volunteer out reach in the Twin Cities for several months years ago. Speghetti-o's would have been top shelf at buck a can. How about four for a buck cat food. Most of the clients I interacted with,I was able to convince them to suck up their pride and do meals on wheels. Now with the demise of ACORN,I have no idea if this program still is viable.

What I referred to earlier was,relatives have the means through good luck and hard work at a Union Job and Generous Guaranteed Pension,they have gone,I got mine screw you to their children. You can only buy just so much junk and the rest is History.

[SMC22307]

38. I've never seen that... ever.

What I do see is a late 60-something coworker with a bad ticker and bum knee working a very physical job to keep his 90-something MIL in a nursing home. She's run out of money, but for a meager Social Security allowance. He also works to help a low-wage daughter, laid-off SIL, and two grandkids. I'm guessing there are a lot of families out there like that.

[FairWinds]

11. Reverse mortgages, like . .

student loan scams, for-profit education, the
depression of wages, the trashing of labor rights,
sub-prime loans, etc.

are all part of a systematic attack on the middle
and working classes.

[Cosmocat]

12. REVERSE Mortgage

I mean ... WTF do people think it is?

Just another example of the stupid in this country.

[treestar]

14. It is a bad idea

it would be better to sell the house and realize the equity. People get too attached to houses they can't financially support continuing to have.

[Rex]

37. +1

[RB TexLa]

16. For those who don't have families this means nothing

But guess no one cares about that segment of the population.

Basically they shouldn't be able to have this because we have to think about families and only what is good for them.

[Hassin Bin Sober]

19. Yes it does. Because it sucks a HUGE amount out of your equity with high interest rates,

... loan insurance premiums and large origination fees.

[JohnnyRingo]

54. ...and that really matters after they're dead.

If there are no heirs who cares what happens to their equity?

Meanwhile, they can take cruises, see the country, and enjoy the end of their lives.

[Hassin Bin Sober]

86. People in need are the least able to afford juice loans.

I'm not 100% against reverse mortgages but the loans are very expensive.

You'd better have a TON of equity to do those things you say. And in that case, it would be cheaper and make more sense to sell and pocket the cash.

We've had the reps in our office peddling these loans. I've run the numbers for a few clients, a friend's mom, and my partner's mom. I can't seem to get one of these to make sense.

[Demobrat]

31. Guess we're supposed to eat cat food

so we can leave our homes to charity.

[PasadenaTrudy]

33. +1

Everything damn thing is about families.

[Rex]

39. You mean like every commercial plays up the happy family angle?

ON this we agree, also I am tired of seeing the busy executive running through the airport commercials. Where are the ads for fry cooks and most of the working class? Oh right, we all have big happy families as we run out the door to be at the board meeting on time.

[R Merm]

17. My favorate line in the add is

"Reverse Mortgages, a law that President Reagan signed into law". Course if Reagan signed it and not that _______ Obama it must be good for us. It is appalling that we will have the next few generations or retirees unable to sustain a decent lifestyle.

[Hassin Bin Sober]

22. Yep.

I'm in the mortgage business. When the reps came around peddling these scams, at first I was like "hmmm this doesn't sound like such a good deal" and then I heard "enacted during Reagan" and it all made sense.

Put in place while corporate America was taking away pensions.

[OldRedneck]

18. Anecdotal evidence

I"m an EMT with a volunteer rescue squad in rural Virginia. When a house fire breaks out, both our volunteer fire departments and the rescue squad are dispatched.

In the past 18 months, I've gone to five house fires. Two of them were interesting. In these two, a family was living in a home owned by an elderly parent -- that is, in one home was mother (78, poor health), her daughter and son-in-law and their family. In the other was father (80, poor health), son, daughter-in-law, kids.

In BOTH these cases:
-- the elderly parent had died 2-3 months earlier,
-- the family discovered the elderly parent had taken out a reverse mortgage, they were not able to pay off the loan
-- both houses were completely destroyed,
-- both families had moved out just before the fire,
-- both fires were determined to be arson.

[oasis]

47. We are living in sad times. nt

[LakeArenal]

20. If Fred Thompson or Henry Winkler are pushing it...

Then you know it's not any good for you.

[VOX]

59. Also Bill Medley, former Righteous Brother...

currently pushes reverse mortgages. Meanwhile, Bill divides his time between Newport Beach, CA and Branson, MO.

Sadness.

[demigoddess]

21. they say you can pay off your credit cards, mortgage, and other debts

but then after you have done the reverse mortgage, you have little to nothing to pay for the nursing home you may need. The reverse mortgage only pays as long as you live in the house. Then you bear all of the expense of selling the house, upkeep and realtor fees, and interest on that reverse mortgage. It is essentially a home equity loan. And you would have to move in with your kids (not desired by many) or go to nursing home. My 2 Aunts, Uncle, Grandpa, and Father in law all ended having to go to nursing home. Reverse mortgage would have bankrupted them. Ps. I will NEVER apply for a reverse mortgage.

[DirkGently]

34. The most tragic example may be

... when the reverse mortgage lender has only one spouse sign the mortgage, and tries to foreclose when they die, proposing to leave the other (presumably elderly) spouse homeless.

We've had some recent caselaw here in Florida I think that you can't do that, but they sure wanted to.

[Eleanors38]

36. Reverse mortgages are a systematic way of destroying home ownership.

A monopoly on property is the goal, here. The notion of buying and owning real estate is going the way of the passenger pidgeon. There will be a shift to a rental economy where the banks are the landlords.

[no_hypocrisy]

41. What happens if a spouse predeceases the surviving spouse?

Does the balance due have to be paid off in full right then and there or does this happen after the death of the second (surviving) spouse?

[SheilaT]

42. One size does not fit all.

For some people, taking out the reverse mortgage makes sense. For others, not so much.

Of course we could instead have a system as they have in France, where someone starts making payments to an elderly home owner, with the understanding that when the old person dies, the person making those payments gets the place. Of course, if the elderly person lives a whole lot longer than you thought she would, you don't do so well, but the old person makes off quite nicely.

Similarly, there are those here who say no one should ever own, should only rent. Some say if your home isn't paid off, you shouldn't retire. And variations thereof. Individual circumstances will differ.

[Nye Bevan]

43. Like most financial products, there is nothing wrong with reverse mortgages when used appropriately.

Take an 80 year old widow who has almost no savings, no pension, gets about $1,000 a month in Social Security, but lives in a house worth around one million dollars, with no mortgage, thanks to diligently paying the mortgage every month for 30 years. She cannot drive but has several friends on her street so does not want to move somewhere cheaper, and is not inclined to downsize. A reverse mortgage would be an entirely appropriate way to increase her income and standard of living, and would still very likely leave a good sized inheritance for her kids if she has any. (Of course if her kids are greedy they would prefer her to scrimp and get by on her Social Security to maximize their inheritance).

[raven mad]

44. My mom got sucked into this.

She couldn't afford her funeral at the end.

[Beartracks]

45. "No one should have to deplete all of their assets to survive."

Oh, well -- welcome to America.

==============================

[Elmergantry]

46. might be a good option for some.

"No one should have to deplete all of their assets to survive."


Why not? You think you can take it with you when you die?

[Nye Bevan]

48. If Grandma has half a million in home equity and wants to spend $20,000 of it on a world cruise,

why not? If her kids are greedy they may not be too happy about seeing their inheritance reduced, but screw 'em. She diligently paid her mortgage all of those years and deserves some pleasure in her retirement.

[Elmergantry]

57. Here Here!! NT

[lumberjack_jeff]

73. Agree. n/t

[Politicub]

79. Completely agree.

+1

[Waldorf]

50. I know several older people who are doing this. Most of them don't have children to pass the house

off to.

[Liberal In Texas]

51. Having just delt with a reverse mortgage company...

...on the side where my mother passed away in March, I can tell you these sharks need more regulation.

First of all, the interest it pretty steep. It shouldn't be more than 1 or so points above the going rate for a regular mortgage.

Second. My mother always believed if we needed to sell the house so she could go to a nursing home/assisted living or she died we would have a year to do it. Not so! They give you UP TO a year. I started to ask the reverse mortgage company what I had to do even before the funeral. They gave me a list of things they required. I complied with all of them. About a month later I get a letter from a law firm saying they had received the paperwork from the mtg. co. to start foreclosure proceedings.

Third. The original mortgage, like so many conventional mortgages was sold to another company. Someone I and my lawyer had never heard of.

Fortunately I had already hired a good lawyer to take care of the estate business and she came down on them like a ton of bricks. She advised me to not worry about getting the house all fixed up and nice and to get it on the marked immediately. I did and the house sold quickly. The main problem was getting over 50 years of things out of the house before it closed. Many things had to be thrown away that I would have liked to been able to ask other more distant relatives if they wanted. I just didn't have the time. And since it was sold "as is" the price wasn't as high as it could have been.

If an elderly person goes into a nursing home and is counting on the remaining equity after the reverse mortgage is paid off, good luck. The business model seems to be to foreclose as quick as possible as soon as the person is out of the house.

[JohnnyRingo]

52. I have a 68 year old friend who has no heirs

He owns his home outright and has a stockpile of money. He never married and has no offspring. Why shouldn't he sell his home now and enjoy the escrow while he lives there rent free? He plans to take it all with him, but it makes perfect sense to me.

I see your point though. For many who are just old and broke the temptation is great to cheat families of their inheritance. While The Greatest Generation died with a surplus to leave behind, later generations will be stripped clean by hospitals, rest homes, credit agencies, and hospices by the time they're interred.

[choie]

53. As a social worker whose clients are

older adults, I have seen many who need these reverse mortgages just to live. Even though most have children, they must make this choice in order to be able to survive. It has nothing to do with splurging or the belief that their children don't deserve to get their money or or the house. It has everything to do with an insufficient retirement system (including Social Security).

[SmittynMo]

64. Most people don't get what you're saying

I certainly do. It's a fucked up system. Most companies(I'm guessing 95%) do not offer any type of pension anymore. I am one of the fortunate ones where his wife was vested. 35 years at one company, with a decent salary, gets you about 1200 a month in pension. It is not tax free!!! Although it's better than nothing, it's a far cry from making sure you don't lose anything because you don't make enough money.

My situation is this:

Between me and my wife, we barely make enough to make ends meet. I consolidated a year ago so my outgoing bills are at a minimum. Income includes SS, and pension. Once one of us dies, the burden is with the other just to make it from day to day. Removing one SS would be disastrous in making ends meet. Even if the house was paid off, taxes and insurance come out to be about 700 a month. P & I are about 400. No one wants to be a burden on their kids. Therefore the only way to survive, is a reverse mortgage, or sell the property. If you do a RM, no one can take your house as long as you are alive, and you will no longer make a house payment. Yeah, blah blah blah, on the interest rates and pitfalls. You can't beat a rigged system. Just look at the elections this year. It's survival that counts now. Remember, a RM only saves you P&I. Is it a good deal? Of course not, but to a person in dire needs, there isn't much of a choice. So, is a RM a good idea? To most, HELL YES, as a last resort. Our only other option is to sell. Once that's gone, what are you going to do?

Hey we're never going to get out of this alive. I came into this world with nothing, and there no reason why I should not go out with nothing. Hey, I'd love to leave my kids something. But in today's fucked up world, there are absolutely no guarantees in life.

[kcr]

72. Thank you for this.

These mortgages are just another symptom of greed and our country's ever shrinking safety net.

[thesquanderer]

61. Since banks can't lose on these, profits should be capped.

This is another one os these things where, if thing go in their favor they make money, and if they don't, the government (WE) are on the hook. There is no risk to the bank, so they should only be permitted to make a couple of percent servicing fee. Profits above that should go into the government fund that covers losses on the bad loans.

[flvegan]

62. Some of that's wrong.

I'd research it better before cross-posting.

[dem in texas]

63. Timely Post - Scott Burns had a column about reverse mortgages in today's Dallas Morning News

I don't know much about them but after reading his article, I know I would never get one.

[Tierra_y_Libertad]

83. We're very satisfied with ours that we got about 3 years ago.

Like most things, it's dependent on your own circumstances and desires.