The reverse mortgage industry continues to be one of the only bright spots in the housing market, but advocates for aging Americans say they should only be used in specific instances. While still small in number compared to traditional mortgages, a weak economy and declining investment income has spurred many elderly people to use reverse mortgages in recent years.
"We’ve increased our volume by over 50 percent since October," said Bank of America spokesman Terry Francisco, whose aunt took out a reverse mortgage after her husband died and her income dropped.
Retirees that have seen their portfolios hammered by the markets are looking for ways to increase their cash flow, and a reverse mortgage is one way that to accomplish that. "In some cases, we have seniors trying to subsidize their monthly cash flow because they’ve lost dividend income. Some financial planners are encouraging taking a reverse mortgage rather than selling off a distressed stock portfolio," said Jeff Taylor, vice president of Wells Fargo’s senior products group.
The article also includes commentary from HUD’s Meg Burns who has been a big supporter of reverse mortgages.