NY Times: Beware of Reverse Mortgages
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A February 11, 2006 article in the New York Times (A Mortgage in Reverse: Debtor Beware) gives a generally negative overview of reverse mortgages:
FINANCIAL planning may not be a sexy field, but every now and then a product stops traffic and turns a lot of heads.
This appears to be the case with the reverse mortgage, an unconventional and expensive way that people who are 62 and older can borrow the equity in their homes � and, in essence, never have to pay back a dime out of their own pockets.
Of course, that basic explanation is rosier than the reality, which is that these loans are annoyingly complicated. Nonetheless, despite breathtaking upfront costs and head-spinning restrictions, reverse mortgages are ever more popular.
While the article doesn’t provide any new revelations about reverse mortgages, it is noteworthy when a publication as prestigious as the Times disses reverse mortgages. The Times article follows a even more negative-toned article published a few weeks earlier at Market Watch, an offshoot of the Wall Street Journal.
As the market for reverse mortgages grows, it’s healthy to have open discussion about the merits and drawbacks of the products. Not only does this provide borrowers with both sides of the story, it provides the reverse mortgage industry with clear guidance on areas that are in need of innovativation and change.
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