Not that long ago (it seems like yesterday), I looked at reverse mortgages as a potential solution to the baby boomers' need for retirement savings issue. That was before CountryWide imploded and the housing market went into a
It turns out that some reverse mortgage seniors are being foreclosed on at the death of the one spouse who signed the document, if they can't pay off the loan. Ron Lieber, of the New York Times, reports on this unfortunate state of affairs in "A Red Flag on Reverse Mortgages." In the article, Ron provides an excellent overview of how reverse mortgages work and what they are intended for. It seems that in the effort of many people, including HUD, to caution seniors ( you have to be at least 62 years old to get a reverse mortgage ) to pay attention to costs and the sleazy activity of annuity salesmen, the impact of one spouse signing and then dying wasn't fully appreciated. It's reached the point where AARP is suing HUD.
In the immortal words of Gilda Radner : "It's always something."
Addendum: If you can only read one financial columnist, Ron Lieber is an excellent choice. I'm a fan.