In today’s Realtor Magazine news feed there is a story – “More Seniors Have Reverse Mortgage Regret” - about how more and more seniors who took out reverse mortgages on their otherwise paid off homes are now losing them to foreclosure anyway, many times due to unpaid taxes. The story in the Realtor Magazine feed references an original story in the Orland Sentinel from Feb 3, 2011. If you click on that link you are taken to the Orlando Sentinel Article Collection to the Story – “Seniors find dark side to reverse mortgages.”
In an ironic twist that is sure not to be lost on many the Orland Sentinel site uses Google to supply ads around the boarders of the articles and the ad that comes up embedded in the article is for Reverse Mortgages from Met Life. The Google ad bar next to the article has a mix of ads for reverse mortgage suppliers and foreclosure avoidance counseling services.
I’m sure that the folks who came up with this reverse mortgage idea will defend the concept mightily; however, I’ve been concerned from the get-go that seniors might not understand what they are getting themselves into and what the risks are associated with those mortgages. Many seniors may also be taking out these loans for the wrong reasons or as stop-gaps with no long term solution to their issues in mind, especially how to pay the taxes that don’t go away.
Perhaps the seniors in question are doing these reverse mortgages to delay the inevitable loss of their homes; but to my way of thinking they would be better advised to sell the place off and put the proceeds in the bank and go find a nice apartment somewhere. As it is, they get to spend a little from the reverse mortgage proceeds and then lose the home anyway and walk away with nothing.
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