How to Navigate the Changing Reverse-Mortgage Market
These products might appeal to cash-strapped seniors, but they're not without risks.
If you tune into cable channels that reach older viewers, it's hard to miss the ad pitches for reverse mortgages. Among the pitchmen are older actors Fred Thompson and Robert Wagner, who explain to seniors in reassuring tones how easy it can be to tap home equity to meet their expenses. But outside the realm of TV ads, the reverse-mortgage industry isn't quite so calm these days.
The industry has been struggling to cope with a rising number of nonperforming loans and foreclosures in the wake of the housing crash. It's also adjusting to a changing loan marketplace following the departure of three very large lenders and the introduction of new products. And more changes are looming, with a temporary increase in loan limits tied to the federal stimulus law scheduled to expire this fall.
Mark Miller does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.