Shawna Reeves Nourzaie, a California social worker who led a reverse mortgage seminar at the 2008 National Council of Aging conference in Washington, D.C., said the loans typically have fees that exceed 10 percent of the reverse mortgage debt…The loans should be a ‘last resort’ for seniors, because of the expense associated with them, said David Certner, AARP’s legislative counsel.
Recently, Babette B. Bach, ESQ., CELA, of Bach Elder Law, a Sarasota, Florida-based elder law firm, offered her expertise and knowledge with CNBC’s Dennis Kneale in regard to reverse mortgages and the government-guaranteed loan program. Watch the CNBC program for the full story: Reverse Mortgages: Next Subprime?
A recent article brought the same debate local, discussing the pitfalls of reverse mortgages for aging adults.
Read an excerpt or visit the Sarasota Herald Tribune for the full article:
“…the biggest criticisms concerning reverse mortgages are the myriad fees attached to them.
Reeves Nourzaie and others add that many seniors also are unaware that reverse mortgages can also affect eligibility for Medicaid, because loan proceeds — if received in a lump sum — raise asset bases above allowable limits.
‘They started out as a helpful niche for some,’ said Reeves Nourzaie. ‘But now they’re billed as the loan for everyone over 62.’
…some worry that government backing of reverse mortgages could lead to another banking crisis, because future appreciation will be necessary in many cases to pay off the loans and interest.
‘Because of the declining housing market, and the inability of many to sell their homes, I think you’re going to see a lot of foreclosures involving reverse mortgages,’ said Babette Bach, an attorney with Bach Elder Law, in Sarasota.
‘Ultimately, I foresee that there will be a taxpayer burden,’ Bach added. ‘You’re going to see a crisis in reverse mortgages just like you are in other forms of lending, because it’s based on bubble value.'”