In addition to people with reverse mortgages, people who have VA loans with "no money down" also often lose their homes to foreclosure. Both VA mortgages and reverse mortgages are Government programs because the banks won't provide these loans without the taxpayers footing the bill when the loans go south. Banks are smart enough to know that these loans are not based on sound financial principles, so they won't risk their own money. But, they are happy to use taxpayer money to facilitate the loans. You can say that someone lost their house because they didn't pay their taxes, but that is not the fundamental reason. Financing a house properly and responsibly requires the homeowner to have "skin in the game", which these people don't have. That is the basic reason why there are so many foreclosures with the loans. Take away the Government guarantee and the mortgages will disappear, as they should. Several GAO audits have confirmed it.
|