Reverse Mortgages Poised for Rebound Amid Troubled History
Advertised as a path to an affordable retirement, federally insured reverse mortgages are showing signs of a rebound, drawing the scrutiny of regulators seeking to reduce historically high default rates that have cost the government billions. Industry analysts expect strong growth as the housing market improves, particularly in once hard-hit Sun Belt areas including Phoenix, Miami, and San Diego, and aging Americans find value in growing old in their homes. They are also being boosted by high-appreciation, gentrifying neighborhoods in older cities such as New York’s Brooklyn borough. Analysts say they expect continued interest as the leading edge of 78 million baby boomers approach 70, the age when a person typically begins to consider a reverse mortgage. A poll by Gallup in April found that 68 percent of Americans ages 50 to 64 said they were “very” or “moderately” worried about having enough money in retirement. “Reverse mortgages will be a lifeline for millions of Americans in retirement in the years to come,” said Greg McBride, a chief financial analyst for Bankrate, citing growing financial pressures from rising college tuition for their children and health care.