Reverse Mortgages can be Hazardous to your Equity
The National Consumer Law Center has come out with a report detailing the risks of reverse mortgages for senior homeowners. Because of high fees, interest rates and other issues, I generally do not recommend reverse mortgages, although for some they may be the only feasible way to access cash.
And you are a estate planning expert??? That is scary. You just made a statement which announces a clear bias based on what YOU deem high fees, interest rates and other issues. So I guess it would be safe to assume that a 1.5% annual fee for a mutual fund investment is okay because it's less than the roughly 5-7% fees associated with a reverse mortgage...even though it equates to many thousands of dollars over years of trying to save for retirement. That calculation has probably never entered your calculator keys has it? Have you ever shared that consideration with clients, etc?
What specifically is so expensive about the fees associated with the FHA reverse mortgage that precludes a so called expert from addressing the myriad of potential benefits of leveraging equity to grow wealth...especially since that is what many wealthy people have done for years. Narrow thought like this clogs the mainstream from thinking OUTSIDE the box to use their hard-earned assets to grow wealthy.
Comparing an FHA reverse mortgage to a standard FHA mortgage would be a more appropriate comparison...but then again even that is hard to do since the FHA Reverse Mortgage has no income or credit scoring qualifications. Actually, it sounds like a great way for fixed income seniors to FIX a monthly budgeting deficit or to tap an IDLE asset to grow wealth or live a better lifestyle (i.e. use reverse refi proceeds to buy a low priced income producing vaction home) or gift to kids/grandkids now to leverage the current higher purchasing power of a dollar (ie. college education, down payment to buy firt home at current low prices, etc). The potential is boundless, but what you offered was an opinion highlighting FEAR of the downside (which exists with even a short stroll across the road).
I wish you the best, but if you prefer to perpetuate fear of risk...at least inform your audience about up side. It's not necessarilly darkness...but rather a lack of light that makes it difficult to see clearly.