This article from The New York Times highlights some of the problems related to reverse mortgages.
http://www.nytimes.com/2011/03/09/business/09mortgage.html
The lawsuit here alleges that HUD made rule changes that allowed underwater homes with reverse mortgages to be sold for less than the full mortgage balance so that heirs or spouses are unfortunately left having to satisfy the full mortgage balance later on!
I have been warning my senior citizen clients for several years now about some of the dangers of reverse mortgages. One of the issues to be aware of is how long you will stay in the house. In many cases, these loans only make sense if you will be in the home for a number of years. Some experts say that if you will move in less than 7 years, these products are too dangerous.
In our practice, where we regularly see clients who owe so much more than their mortgage loan balance, it is even more important than ever to evaluate these transactions, and with counsel in most cases.
Please let me know what your thoughts and questions are!
Lee M. Perlman, Esquire
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