muses of the moment

March 8, 2014

Thinking about a Reverse Mortgage? Don’t!

Filed under: Housing Market, Real Estate Investments — totallygroovygirlfriday @ 1:47 am

groovygirl had been very interested in these new reserve mortgages. Here is an excellent article that explains exactly what they are and how they work.

groovygirl is especially leery of the securities that these mortgages are wrapped in and sold to investors. Do not invest in those types of securities. Groovygirl believes the reverse mortgage industry will implode as soon as the first mortgages can’t pay their property taxes and insurance.

groovygirl also believes that although these types of mortgages will be a small percentage of over-all mortgages that they will help to intensify the decline in real estate in the US. Remember that Martin Armstrong has a long-term, 72 year cycle in US real estate that began its decline in 2007, with a slight uptick from 2012-2015, and will continue to decline into 2032. This is good news for anyone with cash wanting to buy houses at fire sale prices in the next 15 years or so.

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3 Comments »

  1. Thanks, good to know this. At one time we were considering this option for my dad, glad we did not pursue it.

    Comment by sw — March 8, 2014 @ 2:21 pm

  2. Groovygirl makes a good point about seniors not paying property taxes as it’s already happening. But she fails to mention that most reverse mortgages are FHA insured. In October 2013 HUD took action to make the product safer. The press has misinformed everybody about the product.

    Comment by Steve Strauss — March 8, 2014 @ 7:45 pm

  3. The following link is a good summary of pros and cons of reverse mortgage from Boston College Center for Retirement Research.
    http://crr.bc.edu/briefs/the-government%E2%80%99s-redesigned-reverse-mortgage-program/

    Comment by Steve Strauss — March 9, 2014 @ 11:37 am


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