HUD changes likely to boost use of reverse mortgages among homeowners

As reported in a feature story in Bloomberg Newsweek, there are important changes in reverse mortgages that would appear to be ready to boost the use of this planning concept among both older and younger home owners.

The full story in Bloomberg Business Week is available by clicking here.

Quoting the article on reverse mortgages:

“Ten years ago, reverse mortgages were primarily used by widowed or single women well into their 70s with little other means of retirement income. Now, big losses to retirement savings as a result of the financial crisis have stoked interest among younger retirees of both sexes looking to boost current income using their homes.

Reverse mortgages let a homeowner age 62 or older convert a portion of the equity in his home into cash. Unlike a traditional mortgage or home equity loan, repayment isn't required until the borrower either no longer uses the home as his primary residence, sells it, or dies. Instead, he receives a lump sum for the amount of the loan less up-front fees, or monthly payments from the lender.

"It's viewed even now as a niche product that people only make use of in desperation," says Anthony Webb, research economist at the Center for Retirement Research at Boston College. "Given the inadequacy of retirement savings, it really is something that everyone ought to be thinking about, even if in the end they choose not to take advantage of it."

Given the current mess in mortgages, foreclosures and now a nationwide moratorium on foreclosure sales, more people are going to need to stay in their homes due to economic necessity, but will need to find a way to free up cash flow with out risking the loss of their home. Reverse mortgages could be the answer for more and more home owners of any age.

This video summary on reverse mortgages features Danny Davis, host of the Mortgage News Channel, who brings you a mortgage news update discussing the key points in this article. ( The Mortgage news update is sponsored by Sun American Mortgage Company of Mesa, AZ, one of the nations leaders in reverse mortgage underwriting.)