Suggesting that will all the news about the economy and government dysfunction, NY Daily News money columnist Jean Chatzky writes that readers may have missed changes to the reverse mortgage program.

 

In her article, "Reverse mortgages in a down economy require some reevaluation, should act as last resort," Chatzky highlights a couple of changes and then falls back on a common refrain.

She discusses how Bank of American and Wells Fargo left the reverse mortgage market, stating that, "Clearly it wasn't a profit center."  This is certainly a supposition on her part without basis or fact checking.  Neither bank suggested that their reverse mortgage sectors were not profitable in their exits.  Wells Fargo has maintained that headline risk and unpredictable home values led them to the decision.  Bank of America's exit appears to be part of a broader plan of scaling back mortgage operations, including the wind down of their wholesale channel, as the bank reorganizes out of the mortgage mess.

Chatzky also points to the introduction of the HECM Saver that offers a lower upfront mortgage insurance premium.  The Saver is a good option for those who want to borrower less or for a shorter period of time.

Then she falls to the standard refrain that reverse mortgages are still a product of last resort.  She encourages seniors to look to a home equity line of credit, trade down to a small space or less expensive neighborhood, or get a roommate.  Get creative, she suggests.

It would seem reasonable that in making such suggestions Chatzky would at least consider how distasteful her options may be for many seniors who do want to stay in their homes comfortably and secure without the weight of a mortgage payment or having to live in in a less desirable environment.

Such advice fails to consider the potential flexibility that the reverse mortgage can offer in evaluating the available scenarios for senior.  Columnists, such as Chatzky, need to take a more thorough approach rather then basing their determinations off of limited information.