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Originally Posted by Plinker
It seems, in my opinion, there have been a lot of posts about reverse mortgages. Apparently, there are many inconvenient truths that you may be unaware of. The following I found to be particularly egregious.
Why should taxpayers be on the hook when a reverse mortgage turns toxic?
This from the Heritage Foundation
“Because of the largesse of federally financed subsidies in the Federal Housing Administration’s reverse-mortgage program, the federal government has gradually crowded out private insurers from the market for these financial products since the program began in the late 1980s.
Indeed, amid the multi trillion-dollar maze of federal insurance and guarantee programs lies the Federal Housing Administration Home Equity Conversion Mortgage program—an insurance program providing loss coverage on reverse-mortgage originations backed by federal taxpayers.
The loan program simply has become a severe financial burden for federal taxpayers. The Federal Housing Administration reports that the Home Equity Conversion Mortgage program faces a financial shortfall totaling roughly $14 billion in fiscal year 2017.
To avoid any further compounding of the fiscal fiasco, policy leaders should wind down the federal Home Equity Conversion Mortgage program, and in the interim certainly refrain from any misguided reforms that would increase moral hazard, put more taxpayer money at risk, and ultimately continue to crowd out private mortgage insurers from the market for reverse mortgages.”
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There's nothing wrong with Reverse Mortgages if you understand what they are and how they work. There are situations with any financing that can put you into an unfavorable condition. Most of the NaySayers don't understand what a RM is or how it works. I've had many mortgages and one reverse mortgage. Even though I should not have used the reverse mortgage when I did it did not turn out bad for me. In fact it worked out quite well and gave me some advantage over having a regular mortgage.
I find that people tend to label things they don't understand as 'Wrong' or 'Bad' and sadly many other people adopt that opinion rather than taking the time to find out for themselves.
I'm not an advocate of Reverse Mortgage, but I would not say there's anything wrong with them.