House Rich, Cash Poor? Bet The House!
One of the more disturbing trends to develop in the home loan debt boom is the reverse mortgage. House rich, cash poor is the "predicament" many older people find themselves in. Aside from the question of how many older folks would be just plain poor were it not for the real estate boom, one has to wonder why such a risky program is being pushed upon needy seniors. As CNN reports " the number of (reverse mortgage) loans originated in 2004 was more than double what it was the previous year. ..Demand for information on reverse mortgages has increased exponentially." said Bronwyn Belling, a reverse mortgage specialist for the AARP Foundation".
Indeed, the AARP has web sites dedicated to informing its members how to borrow against their home equity. The FHA will insure these loans, under certain circumstances. Like those who rushed into the stock market just before it collapsed, these elderly borrowers may come to regret the choice. " because you don't pay down your debt until you sell, move or die, the interest you owe could add up to quite a bit over time. Mandatory mortgage insurance ensures that you (or your heirs) don't end up owing more than the house is worth. But it's entirely possible to drain all or most of your home's equity".