TIME GOES BY | GRAY MATTERS: Reverse Mortgages

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by Saul Friedman

I am an HECM borrower and like most participants, the cash I got from the reverse mortgage served as a cushion which was carefully invested. The proceeds may also be taken as a line of credit or as period payments. This is one federal government program that has worked as intended for millions of borrowers yet relatively few Americans have taken advantage of it partly because they don’t like to mortgage a home that’s free and clear, or they’re concerned about their heirs. So they let all that equity remain idle.

Private (non-guaranteed) reverse mortgages have been around for years. But only after years of study by housing and aging experts did the FHA get into the business when President Reagan signed it into law on February 5, 1988. (Note to his present day admirers: He helped save Social Security while expanding the federal government into the reverse mortgage business.)

Now, although many younger homeowners can’t refinance because greedy banks are refusing to part with their money, reverse mortgages are available because of the FHA guarantees. And as Kiplinger has reported, older homeowners facing foreclosure have been rescued by HECMs which can supply the cash needed to catch up on payments.

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