The media often overlooks the risks inherent in any mortgage: froward or reverse
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We see many national media headlines on how risky a reverse mortgage can be for older homeowners. Risky? This week we briefly touch on the most common risks that can be found in traditional and reverse mortgages and how most risks can be avoided.
Spending the kids inheritance.
Many formal complaints filed on a federally-insured reverse mortgage are from the adult children or heirs of a borrower. Many are unpleasantly surprised that mom or dad took out the loan only to learn that some or all of the home’s equity has been consumed. In many instances the parents could not cover their daily living expenses and chose a HECM to maintain a sense of financial independence. Often the adult children who are expecting to inherit the home were unable to financially assist their parents financially. While heirs may worry their inheritance is being spent, their parents often face real and more pressing and immediate financial concerns in their non-working years. If the parents were unable to keep their traditional mortgage payments current and lost the home to foreclosure, any remaining equity would be lost for both the parents and children alike…
| Dan Hultquist article: Can a foreclosure occur with a reverse mortgage? |
| USA Today HECM foreclosure map | NRMLA response to USA Today article |