So, if you've been keeping up to date with blogitecture.net, you will know that I, Mark, have been having in depth conversations with my mother about her decisions to pull out the equity on her home and get a reverse mortgage. This has caused me to have my own debates within my head and has had an extreme amount of pressure put onto me. I was always under the impression a reverse mortgage was a complete scam yada yada yada- but after doing some healthy amount of research I came under several different conclusions, which I thought my findings might be helpful for my readers.
The following comes from FTC's .gov website:
There are three types of reverse mortgages:
single-purpose reverse mortgages, offered by some state and local government agencies and nonprofit organizations
federally-insured reverse mortgages, known as Home Equity Conversion Mortgages (HECMs) and backed by the U. S. Department of Housing and Urban Development (HUD)
proprietary reverse mortgages, private loans that are backed by the companies that develop them
Now, from my experience, the single purpose reverse mortgage was the one that always caused me to raise red flags. But most importantly, the proprietary reverse mortgage loan is the one that consumers should be most aware of. These types of loans are NOT federally insured and are known to be conducted by shady mortgage firms that have only one interest in mind, which is money.
After doing some more research on recent news regarding reverse mortgages, I came across this article on Examiner.
“The new jumbo program gives thousands of seniors the ability to tap into their home’s equity,” said Donald Gigantino, Vice President for Reverse Mortgage Space. “This will be a real game changer to the market.”
This was the article my mother came across where she referenced this new "jumbo program". As of now, there isn't much information about it, but, again, it is a federally insured loan which makes me feel a lot better. It's called the "HomeSafe" (I'm sure the home isn't safe after a reverse mortgage, regardless!), and it's a new option for seniors 62 and older. What's important is making sure that you KNOW who your lenders are, as many of them are money hungry sharks. The Coldwell Bankers are always someone to trust, but if they are not in your area, there are many other financial institutions you can be able to choose from.