Revisiting Reverse Mortgages Home Loans for Older Adults

 According to the most recent U.S. Census, an estimated 285,000—or roughly 10 percent—of Chicagoland's population is over the age of 65. Older Chicagoans live in all  parts of the city, both integrated into their longtime neighborhoods and in  seniors-only condo developments all along the lakefront. While not as common as  in other parts of the country, a significant portion of these residents have  reverse mortgages.  

 Basic Facts

 In short, a reverse mortgage is a type of loan structure available only to  senior homeowners 62 years and older. According to the federal Department of  Housing and Urban Development (HUD) which administers the great majority of the  reverse mortgages written in the U.S., it is a special type of home loan that  lets the borrower convert a portion of the equity in their home into cash.  Although the interest keeps building up, the reverse mortgage doesn’t become due or payable until the borrower either passes away or moves out of  the home permanently, meaning that he or she hasn’t lived in the home for a year or more, according to Peter Bell, president and  CEO of the National Reverse Mortgage Lenders Association (NRMLA). The repayment  amount can’t exceed the sales value of the home, and after the loan is repaid, any  remaining equity is distributed to the borrower or the borrower’s heirs or estate.  

 “There are liabilities taken on by lenders as part of their responsibilities as  FHA lenders,” says Bell, but “the FHA insurance is designed to help mitigate those liabilities.”  

 After years of popularity, however, the current financial situation has  seemingly made some lenders think twice about offering reverse mortgages.  

 Some of the largest lenders, such as Bank of America, Wells Fargo and Financial  Freedom, have stopped offering the product, although they continue to honor  existing reverse mortgages. Still, there are still some large companies  offering reverse mortgages, such as Metropolitan Life.  

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