‘Real Estate Weekly’: Reverse mortgages blasting baby boomers

In an ideal world, the reverse mortgage is a tool available to aging homeowners who want to ensure they have the money needed to live out their golden years in the comfort of their family home. But in the real world, a new report says, aging baby boomers are flocking to the reverse mortgage because they desperately need cash to cover daily expenses and monthly bills. In a report titled “Changing Attitudes, Changing Motives,” the MetLife Mature Market Institute reports slightly more than one in five reverse mortgage applicants—21%—are age 62 to 64, and nearly half of all applicants (46%) are under 70. Those are significant increases from 1999 figures, when just 6% of applicants were age 62 to 64, and the percentage of applicants under 70 was half of what it is today. “Several years ago, many older homeowners took out this loan as a way to enhance their quality of life. But now, people who consider these loans are more concerned about urgent financial needs, including lowering debt,” the report says. Stephanie Moulton, an assistant public policy professor at Ohio State University and a former reverse mortgage counselor for AARP, tells Forbes she doesn’t recommend a reverse mortgage for those who are just crossing the minimum eligibility age, 62. “It spells trouble,” Moulton says. “If they don’t have other retirement assets and they’re spending down the equity in their house, these ‘young’ reverse mortgage borrowers are putting themselves at great risk down the line.” Read the rest of this story and the entire Real Estate Weekly e-newsletter here.