Ironically, a contributor to this trend appears to be one of the newer, low-cost government-backed reverse-mortgage options.
WSJ: Rethinking Reverse Mortgages, Part 2: Pitfalls and Dangers
Before you start talking to lenders, consider consulting a HUD-certified reverse-mortgage counselor to learn more about the options and mechanics.
As of February, nearly one in 10 reverse-mortgage borrowers were at risk of foreclosure as a result of failing to pay real-estate taxes and insurance.
WSJ: Rethinking Reverse Mortgages, Part 2: Pitfalls and Dangers
Bank of America, for example, is studying "options to address some of the other costs associated with the loans, " says Steve Boland, the bank's reverse-mortgage executive.
You can find a directory of reverse-mortgage counselors at hud.gov.
While most HECM reverse-mortgage options carry adjustable rates and offer a line of credit or annuity-like payouts over time, the sole fixed-rate HECM choice is available only with a lump-sum payout.
WSJ: Rethinking Reverse Mortgages, Part 2: Pitfalls and Dangers
One drawback of a fixed-rate reverse mortgage is that you have to draw down the entire loan amount up front and pay interest on the entire amount across the life of the loan.
So far, the cuts in fees apply mainly to one type of reverse mortgage: the plain-vanilla fixed-rate "home-equity conversion mortgage, " which is backed by the Federal Housing Administration and is paid out to the borrower as a lump sum.
One potential response would be for the Fed to purchase even more mortgage-backed bonds in an effort to reverse yields.
WSJ: HEARD ON THE STREET: Economic Uplift May Be Drag on Housing
Worse, nearly 10 percent of reverse mortgage borrowers were at risk of foreclosure due to non-payment of taxes and insurance as of February, 2012, according to the CFPB report.
FORBES: Reverse Mortgages Fall Short of Their Potential, Says a New Government Report
Mary Hobbs, 69, is closing on a reverse mortgage with Security One Lending of San Diego for her three-bedroom home in a retirement community in Lincoln, Calif.
Some are even doing cash-in refinancing, the reverse of the cash-outs of yesteryear, and contributing money from other sources to reduce their mortgage balances.
FORBES: Don't Look For Housing To Help The Economy, Says Shilling
"A reverse mortgage is an expensive way to enable one to tap an asset of last resort--their home, " says Ron Roge, chief executive officer of R.
The amount of the reverse mortgage loan is also determined by the youngest person who owns the home, so a 70-year-old person who is co-owner of a home would lower the amount her 75-year-old spouse would otherwise get.
This month, some investors have been hit with losses as their commercial-mortgage securities, or CMBS, that had been steadily rising in value for months went into reverse.
应用推荐