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Many fellow Americans that have worked their entire lives, weathered several recessions and depressions, put their children through school, helped many in need, and faithfully paid their mortgages for decades are now being taken advantage of once again. Most have followed all the rules necessary to be considered fiscally responsible, yet because of "legal fraud" by the financial sector and policies effected by purchased politicians, their years in retirement will be compromised.

The Plutocracy, the one percent has walked away with a large percentage of their 401Ks, their SEPs, and to some extent their financial security. Because of stagnant or falling real wages, much of the working middle class have maxed out on their credit in the attempt to maintain their standard of living. For a Plutocracy that feeds on perpetual growth, from where will it feed now? An old and well-crafted financial instrument known as the reverse mortgage is being marketed on steroids to a baby boomer population.

Before any reader of this article that may have already taken out a reverse mortgage gets upset, please note that it is understood that for many this is the only option left. That said, every American should be fighting for a system that allows all the ability to build a nest egg that can be transferred to the next generation.

More about reverse mortgages below the fold.

Back in 2010, Sen. Fred Thompson was a spokesman for AAG and was pushing their government back reverse mortgages. I was writing my book when the commercial came on and I wrote the following in a chapter right then.

While taking a short coffee break from writing this book I saw former Republican Senator Fred Thompson, an AAG spokesman hawking reverse mortgages. He says:

“Hi folks, I am Fred Thompson. Now like me you probably heard a lot about reverse mortgages but weren’t quite sure how they worked or whether they would be the right financial solution for you. Well take my word for it and hundreds of thousands of other Americans who have used the Government Insured reverse mortgage as a safe effective financial tool. If you are 62 year or older and own your own home, give AAG a call and find out how a reverse mortgage can help you. I am extremely proud to be associated with AAG, a national reverse mortgage lender that is helping seniors overcome their financial worries and live the lives they’ve dreamed. Why don’t you find out more by calling AAG today? Find out how much call you may qualify for today.”

My first thought was how could a former Senator, a senior, a person who likes to tout morality be so callous to entice the elderly to splurge their wealth away. Most Americans have a large portion of their wealth in their homes. Having some wealth to transfer to one’s offspring helps the next generation to the next financial level.

Unfortunately, yet another financial instrument designed to use the ignorance of the average American citizen’s knowledge of our economic system to donate their money up the wealth tree to the rich. At the end of the reverse mortgage’s term, the elderly is left without an asset to transfer to their offspring at the time of their death.

Ironically as this piece is being written Fred Thompson is back on with the 2013 version of his "working middle class pilfering" commercial.

The most deceptive part of the ad is stating that the owner of the house retains ownership of the home. You cannot own something that you cannot give to someone free and clear. Even more ironic is that Thompson, a professed small government conservative, is pushing a product that depends on the good faith and capital of the United States government.

Most Americans amass most of their wealth within their homes. Each generation in a responsible family is better off when the previous generation wills their assets forward. Reverse mortgages are yet another financial instrument that stunts the growth of the middle class by encouraging home owners to extract the capital out of their homes and use it as a supplement to their retirement or to simply splurge. Inasmuch as most reverse mortgages are federally regulated, their upfront costs are very high. These costs amount to free cash for the bank and mortgage insurance companies, your money transferred to them for a marginal service.

The big dirty secret is that reverse mortgages, like student loans pre-Obama, are nothing but a no-risk gift to the bankers, a wealth transfer engine from the masses to a select few. When the "owner" of the home dies, the government pays the bank any difference between the amount owed (interest plus principal) less the sale price of the home. If the heirs want to keep the home, they must pay the loan off in full. If the amount owed is more than the value of the home, the heirs must pay 95 percent of what is owed to the bank with the government paying the rest. What is the reason for the bank being in the transaction? It is there simply to extract from the government and the homeowner. They have absolutely nothing at risk for the profits they make.

Reverse mortgages mask a systemic problem that affects the American worker, a backward and inhumane retirement system. Every American worker makes a vibrant economy possible by providing 40, 50 or more years of work, taxes, and spending. It is appalling that a worker is incapable of having Social Security capable of providing a decent living. No one should have to deplete all of their assets to survive.

The trajectory in this country has been that the wealth and income of the very few at the top grows faster than the growth of the economy as a whole. This means that some of that growth is directly coming out of the pockets of the working middle class in the form of lower wages, extractions from the government (tax dollars, interest payments, etc.), reverse mortgages, higher tuitions as states lower taxes, commercial student loans, etc. This is an unsustainable path and it is leading to a country where the vast majority of citizens will have no assets. They will be functionally indentured servants. They will be nothing but a commodity, a unit of work and service.

Wake up America. Taking this country back from the Plutocracy will require education, resolve and action. Taking this country back will entail taking back what was stolen through well designed redistribution mechanism that foments a vibrant working middle class.

Originally posted to Daily Kos on Sun Aug 18, 2013 at 06:45 PM PDT.

Also republished by Daily Kos Classics.

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Comment Preferences

  •  Have we really had "perpetual growth"? (17+ / 0-)

    Or just perpetual and mostly unearned upward redistribution?

    I.e. has the pie gotten bigger, or just the plutocrats' slice of it?

    "Liberty without virtue would be no blessing to us" - Benjamin Rush, 1777

    by kovie on Sun Aug 18, 2013 at 06:49:52 PM PDT

  •  Isn't that where we started 400 years ago? (20+ / 0-)
    This is an unsustainable path and it is leading to a country where the vast majority of citizens will have no assets. They will be functionally indentured servants. They will be nothing but a commodity, a unit of work and service.
    Most people who came to this country in the beginning had no assets - nothing but their two hands and a willingness to work hard for someone else who paid their way over, just so they could have a chance, some day, to work for themselves.

    A lot of them never made it.

    Then the Power Elite found something even "better" - a class of people who could be imported UNwillingly and forced to work until they died.

    IMHO the Power Elite misses those glory days and wants to force us all back into them. They either don't realize, or don't care, that their standard of living will crash back to that pre-industrial level too.

    If it's
    Not your body,
    Then it's
    Not your choice
    And it's
    None of your damn business!

    by TheOtherMaven on Sun Aug 18, 2013 at 06:52:36 PM PDT

    •  Over 1,000 Years Ago. (7+ / 0-)

      Western history since the end of the Dark Ages has been in the Free Lunch Economy of new worlds and improved exploitation of old worlds. These gave (long-term) steady increases in the flow of cheap surplus resources, waste capacity and living space into the most advanced level of civilization.

      All our concepts of freedoms, rights, responsibilities, economies and economic theories evolved and matured for a millennium under the expectation that the bounties were perpetually growing such that sharing and obligation to community should be minimized to maximize individual gains which would accelerate the inflow of bounties.

      The elites have something no elite ever had before, machines that can do labor as well as machines that can do problem solving.

      They're not at risk of the kind of fall they've always been susceptible to before.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Sun Aug 18, 2013 at 07:17:17 PM PDT

      [ Parent ]

      •  Elite machines (0+ / 0-)

        "The elites have something no elite ever had before, machines that can do labor as well as machines that can do problem solving."

        You mean vacuum cleaners, dishwashers and iPads? Those machines of the elite?

      •  With great power comes great, er, opportunity? (0+ / 0-)

        It still requires using the tools intelligently.  Plenty of day traders apparently lose their shirts trying to beat the big Wall Street Banks that not only have the computer programs to automagically trade at the right moment but they also have the ability to know before the rest of the public just which way the stocks are going to go, giving them advantages that put them ahead of the capabilities of the "little people" like the day traders in their basements next to the bags of cheetos.  Oh, and all the gold hoarders who are down 30% from the high of the market.

        The "smart" people are an increasingly smaller and smaller number who are on top of that wealth pyramid.  They're calculating that they'll die before they ever have to pay a price for the damage they're doing for the world and I'll have to say the current generation of them are probably right in that calculation.

    •  It is no coincidence ... (12+ / 0-)

      Intertwined are
      - The repeal of Glass-Steagal
      - The death of defined benefit pensions
      - The decline of real wages
      - The increase in ratio of incomes of the wealthiest to the poorest
      - The increased reliance on account balance-type pensions
      - The shortening of the bubble-bust cycle
      - The rise in use of consumer credit

      We have to FIGHT this constant erosion (theft!) of middle class wealth accumulation.

  •  I thought you were going to recommend the repeal (5+ / 0-)

    of the inheritance tax.

    That said, every American should be fighting for a system that allows all the ability to build a nest egg that can be transferred to the next generation.

    Never mud wrestle with a pig. You only get dirty, and the pig enjoys it.

    by SpamNunn on Sun Aug 18, 2013 at 06:59:15 PM PDT

  •  Leaving aside the many other problems with this (20+ / 0-)

    rant, there are childless people who have no subsequent generation to leave their wealth to.  A reverse mortgage may allow them to remain in their home in their declining years; or may allow one spouse to do so while the other receives necessary professional care.

    •  Childless couples often have "other" family (6+ / 0-)

      members who are deserving of (and may be in dire need of) their assets, upon their death(s).

      Why should they be treated any differently from other folks?

      After paying taxes over a lifetime to educate, feed and clothe other citizens' children, seems to me that the least we can do is provide them with a social safety net that would spare them from forfeiting their most precious asset--their home.

      Actually, IMHO, this "standard" should apply equally to all Americans. ;-)

      Mollie

      "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


      hiddennplainsight

      by musiccitymollie on Sun Aug 18, 2013 at 07:25:47 PM PDT

      [ Parent ]

    •  The writer made it very clear that for some, a (22+ / 0-)

      reverse mortgage is the only option.

      Before any reader of this article that may have already taken out a reverse mortgage gets upset, please note that it is understood that for many this is the only option left.
      Overall, the reverse mortgage market is a racket designed to transfer even more wealth from the pockets of the middle class into the already deep pockets of the wealthiest members of our economy.
    •  for those few, I would recommend a straight (9+ / 0-)

      sale with a lifetime estate reserved for the couple

      •  How easy is that to arrange, though? (7+ / 0-)

        after legal fees and whatnot, is that really going to be any better than a reverse mortgage? I mean, unless a family member or friend is willing to do this, who would buy and house and then let the former owners live in it rent free?

        "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

        by Alice in Florida on Sun Aug 18, 2013 at 08:00:31 PM PDT

        [ Parent ]

        •  I have done this several times in the past (1+ / 0-)
          Recommended by:
          Van Buren

          given that some properties may exchange hands only once every 100 years or less, I have bought properties with the owner retaining a lifetime right because I knew the heirs would demand a much higher price or else might not sell at all.  Used properly, it can be a valuable real estate tool

          •  This sounds like unique properties... (2+ / 0-)
            Recommended by:
            susanala, raines

            ...that you particularly wanted to get your hands on.

            Most houses in the 200 block of Spruce Street in Anytown USA don't fall into that category -- they are as unique as grains of salt and as much of a commodity as a grain of salt is.

        •  Depends on the price, no? Location? (0+ / 0-)

          And the expected appreciation of the value of the property during the expected life of the seller - especially if the buyer is making payments to the seller on the sale of the future estate. I don't necessarily see this as any different than many other investments. The buyer pays market price, discounted by the value of the life estate. The heirs get the cash if the seller dies early, the seller gets the money, plus interest, if he lives a long life.

          The investor runs the risk of a long-lived seller, but buys the advantage of locking in future ownership of a valued property for a discounted price, owner financed, with no costly banks or brokers, or feds in the middle. If the investor loses out by having to wait out a long life, it is a socially useful exercise as it allows for the elderly to live on their homesteads.

          While the seller may end up selling his property at a discount in case of an early death, that risk is balanced by the security of a source of cash flow in case of a long life (which is why you would call the RM brokers for advise in the first place), and dying in your home. Besides, if you die an early death and cough up the property at a discount -- you be dead.

          The reverse mortgage industry is a scam, though, as the diarist well points out. The above scenario is how its been done since olden times without government, brokers, or banks, and a real desire to care for the aged.

          “I’m able to fly, do what I want, essentially. I guess that’s what freedom is — no limits.” Marybeth Onyeukwu -- Brooklyn DREAMer.

          by chuco35 on Sun Aug 18, 2013 at 10:18:34 PM PDT

          [ Parent ]

    •  IMO, quite a silly rant too (6+ / 0-)

      If I have no dependents, why don't I have the right to choose a reverse mortgage in my retirement? It allows me to supplement my income and stay in my home.

      All of my OFA sponsored sock puppets and I approve this post.

      by NoFortunateSon on Sun Aug 18, 2013 at 08:13:35 PM PDT

      [ Parent ]

    •  My mother was able to spend the last years (25+ / 0-)

      of her life in the home she and my father built, rather than sharing a tiny Medicaid room in a nursing home, because of a reverse mortgage.
      Yes, that meant reducing my inheritance.  So what?  My parents, by virtue of the way they raised me, by virtue of the love they gave me, gave me everything, and owed me nothing when they died.
      As to the other point of the diary, that as a society we should provide Social Security that truly encompasses security so that tapping home equity isn't necessary for elderly Americans, as well as providing Medicaid that doesn't place a lien against a person's home for every dollar spent on long term nursing home care:  Amen.

      The next time I see some pundit claim that John Roberts is a moderate who wants to preserve the SCOTUS' legitimacy in the eyes of the public I am going to freaking scream.

      by jazzmaniac on Sun Aug 18, 2013 at 08:19:58 PM PDT

      [ Parent ]

      •  Why should we protect the heirs with tax dollars? (3+ / 0-)
        Recommended by:
        melfunction, bobtmn, a2nite

        Many people receive virtually nothing from their parents at death - I certainly didn't. What is wrong with that?

        I have no problem with somebody passing their assets along if they didn't need them. But if they need them, the generation that earned them should use them and there's no reason to divert taxes in order to protect the heirs of those lucky enough to be born into money.

    •  No one is required to leave their assets to anyone (3+ / 0-)
      Recommended by:
      kmfmstar, shanikka, weneedahero

      but a reverse mortgage is a rip-off. Your hypothetical couple could sell their house and use it to help defray living costs in their new apt or assisted living or whatever. But, unless they have protected everything skillfully the government will get it anyway when they end up in a nursing home.

      "Humidity built the snowman. Sunshine brought him down" John Prine

      by high uintas on Sun Aug 18, 2013 at 08:44:50 PM PDT

      [ Parent ]

      •  Incorrect (15+ / 0-)

        I work in a law office, we have a lot of elder clients. Most DO NOT want to move to a nursing home. In many instances, care can be provided in the home the elder has lived in for many years more cheaply in the elder's home than in a nursing home.

        The problem is really not reverse mortgages. The problem is our screwed up medical system, which forces people to bankrupt themselves to get medical care.

        FYI - "protecting everything skillfully" is for most people not an option. Medicaid has closed most loopholes, making it extremely difficult to leave anything at all to heirs if care is obtained through Medicaid.  

        •  OK. Here's what we did. (1+ / 0-)
          Recommended by:
          OleHippieChick

          When my daughter was 6, and we had only been paying for the house for 5 years (very little equity), the house was put into a trust for her. The house reverted to her when she reached her majority. At that time, I had her create a life estate for me. The house is fully paid now, and she will reclaim it at my death. I pay for upkeep and insurance, and we split the taxes. It would be unwise for me to sell this house, as I would have to pay rent somewhere else. Each case is individual. I might be inclined to take out a reverse mortgage if my circumstances were different. Leaving an inheritance, while nice, isn't a requirement. I have a capable daughter for whom the sale of this house will be a windfall. And that's okay.

          •  A dangerous plan (2+ / 0-)
            Recommended by:
            la motocycliste, Happy Days
            The house reverted to her when she reached her majority.
            If your daughter had not turned out to be so fortunate in her own life, you might have found yourself on the street.

            The only advantage that I can see in this plan is so that the parent can receive Medicaid and other forms of government assistance, which means they are supported by other taxpayers so that they can pass on wealth to their kids.

            This is part of the problem, not part of the solution.

            Religion gives men the strength to do what should not be done.

            by bobtmn on Mon Aug 19, 2013 at 06:47:22 AM PDT

            [ Parent ]

            •  Let me give you some more facts so you can (0+ / 0-)

              better assess this. I wasn't married to my daughter's father until after we bought the house. Even though I had worked (we had a business together) to pay for the house equally, when the relationship was about to end, he put the house into trust for our daughter. So you see, it had to do with depriving me of my asset, not depriving taxpayers. Had my daughter not lived to 18, the trust would have been dissolved, and the house would have reverted back to my ex-husband. As it turned out, prior to her turning 18, she and I moved back into the house and my ex made me the trustee (long story, not important). Since I made the mortgage payments, I didn't want her to have the ability to put me out (that happened to an elderly couple in CA). So within days of her 18th birthday, I marched her down to a lawyer's office, and we executed the life estate. I finished paying off the mortgage, and now live rent-free until my death. When I die, the life estate dies with me, and my daughter will have her house to do with as she pleases.

              Note: Most, if not all, government assistance exempts one house if it's the primary residence. I know this because I was an eligibility worker. You need to stop thinking like the RW.

              •  You lose the argument (0+ / 0-)

                I was seriously learning something and considering your valid arguments until the very last sentence.

                You need to stop thinking like the RW.
                Because of that, you lose.  

                I do not have to be a member of any Borg Collective, either LW or RW.     I think for myself.  

                Religion gives men the strength to do what should not be done.

                by bobtmn on Wed Aug 21, 2013 at 04:54:54 PM PDT

                [ Parent ]

          •  Life estates don't work (2+ / 0-)
            Recommended by:
            ColoTim, raines

            90% of American homes are mortgaged. If you can't pay the mortgage, you are out on the street, life estate or no life estate.

            A house with a life estate has no value, because no one will want to buy it with the life estate in place.

            I know an elder who is barely existing on $400 a month social security so she can leave a house to children who can't be bothered to lift a finger to help her. A reverse mortgage would provide in home care, nutritious food and some nice things for her.

            •  The purpose of a life estate is to prevent the (0+ / 0-)

              house from being sold without the holder's agreement. Presently, I have no need for a reverse mortgage. If I did, I'm sure my daughter would concur. And this house no longer has a mortgage.

              The elderly person you mentioned has a choice. Perhaps you can bring up the idea of a reverse mortgage. Maybe his/her heirs will help if they know they stand to lose their inheritance.

    •  Yes, it might (0+ / 0-)

      do that, but at the cost of giving a huge chunk of it to the bank. I'd rather do anything else with it - give it to charity, friends, relatives, or even to the government, than give it to a bank.

      We decided to move the center farther to the right by starting the whole debate from a far-right position to begin with. - Former House Majority Leader Tom DeLay

      by denise b on Mon Aug 19, 2013 at 04:54:04 PM PDT

      [ Parent ]

  •  Actor Alan Thicke is also doing them. (5+ / 0-)
    Recommended by:
    Susan from 29, annieli, libnewsie, DBunn, Chi

    I guess I should say Canadian actor Alan Thicke, as I think he retains his Canadian citizenship.

    Not that there's anything wrong with Canadians, I just think it's pretty crazy to have a non-American touting this thing to Americans so they can potentially lose their homes in their old age. I suppose he can always go back to Canada and be taken care of if his new career as a shill goes sour.

    I can't remember the name of the company he's shilling for and I'm not going to look for it. If anyone cares, you can Google it for yourself.

    PS: Both the Thicke ad and the Thompson ad run on MSNBC during the day.

    "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

    by Brooke In Seattle on Sun Aug 18, 2013 at 07:07:01 PM PDT

  •  Please explain your premise (25+ / 0-)

    Do you think that people with assets at the end of their lives should be subsidized by other taxpayers so that they can pass  those assets on to their heirs?    

    Why should this be so?     You are condemning the upper 1%, but you are favoring the upper 20% over the bottom 80%.

    Most people do NOT have assets sufficient to pass on meaningful amounts to their children.     Why should the children who will inherit nothing subsidize the children who imagined a big payday when their folks die?

    A reverse mortgage may not be good for everyone, but for some it is an ideal way to let the aging person stay in their home.   No one is forced to do it.  

    I think the whole idea that children DESERVE to inherit is wrong.    We need opportunity for everyone, not a head-start for a minority of the well off.   That is true regardless of whether  the minority is the top 1% , 10% or 20%.

    Religion gives men the strength to do what should not be done.

    by bobtmn on Sun Aug 18, 2013 at 07:07:41 PM PDT

    •  I think his perspective is (20+ / 0-)

      it's a bad deal

      1. the banks are being offered a gold plated deal where they get money for no risk.
      2. that money that would have been in the value of the house is going with no returned benefit.
      3. it's further, a great opportunity to cheat the heirs when the property supposedly is passed on.  With the track record of the banks and foreclosures, who would bet there will not be a lot of fraud at this time.

      •  It's a bad deal for some people (20+ / 0-)

        and the ones that advertise on television are probably a bad deal, just like any other financial service that advertises on television.

        But this concern for "heirs" is bizarre...people should have the opportunity to earn a good living, enough to provide for present needs and to save for retirement...and their children should have the same, so they won't need an "inheritance."

        This is the problem--we have a generation of elderly people who benefitted from the New Deal, the GI Bill, union jobs, etc., leaving behind downwardly-mobile children and grandchildren scratching for an inheritance to make up for their inability to find decent paying jobs and save for their own retirement. This is f*cked up--we need jobs, not inheritances.

        "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

        by Alice in Florida on Sun Aug 18, 2013 at 08:10:08 PM PDT

        [ Parent ]

        •  Inheritance is a noble, unselfish gift that (6+ / 0-)

          considerate heirs deeply appreciate regardless of their magnitude of prosperity.

          What my parents have done for me, I will do for my children.

          Unfortunately, some are unable to bequeath treasure to offspring even though they would like to do so.

          Those who wish for their parents to retain all their assets should not be criticized. Their desire is also noble and unselfish.

          Understand, however, that many parents derive joy from the act of reserving assets for posterity.

          •  And Inconsiderate Heirs Treat As An Entitlement (1+ / 0-)
            Recommended by:
            Alice in Florida

            Entitlement, Entitlement , Entitlement, something for nothing followed by a dose of vehement whining about how they have to pay taxes on it.

            To be used to fill the garage with German cars and bass boats and the house with granite, cherry, and stainless kitchens instead of paying forward to their grandchildren.

        •  I don't see it as bizarre. (1+ / 0-)
          Recommended by:
          Happy Days

          That one earns beyond what is needed to provide for oneself, family, and retirement until death is not an anomoly. It is a common occurance, even if it only affects the so called middle class. What I understand from the diarist is that the banks and crooked brokers are vacuuming up this form of wealth as well, and that a scummy pol pitching for the brokers is more than a bit of irony.

          It's not a middle class versus the poor view, but rather the banksters and friends versus the middle class.

          “I’m able to fly, do what I want, essentially. I guess that’s what freedom is — no limits.” Marybeth Onyeukwu -- Brooklyn DREAMer.

          by chuco35 on Sun Aug 18, 2013 at 10:51:53 PM PDT

          [ Parent ]

          •  I'm not saying it wrong (2+ / 0-)
            Recommended by:
            bobtmn, chuco35

            for those who have assets at the end of life to leave some to their children, but it's not something that should be expected or looked upon as a right. The issue with reverse mortgages is complex--in very special circumstances they can be valuable, the problem is scum like the company referenced by the diarist who prey upon low-information consumers to sign them up for something that is not in their interest.

            Rather than banning reverse mortgages, what is needed is a robust consumer protection agency that regulates anyone offering financial services to the elderly, prosecutes abuses, and offers free, fair advice to those who need help in financial decision making.

            "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

            by Alice in Florida on Mon Aug 19, 2013 at 10:40:13 AM PDT

            [ Parent ]

            •  If leaving your excess earnings is not... (0+ / 0-)

              ...considered a right, as far as the middle class is concerned, I fear the government scooping up this wealth. While I believe a hefty inheritance tax is a must, if we are to avoid the creation of a princely class, I think the middle class should have a right to pass on their homestead, and a reasonable cash amount, to their children, as a way to assist upward mobility.

              BTW, i didnt read the diary as advocating an end to RM, but rather an expose of how they are being abused.

              “I’m able to fly, do what I want, essentially. I guess that’s what freedom is — no limits.” Marybeth Onyeukwu -- Brooklyn DREAMer.

              by chuco35 on Tue Aug 20, 2013 at 07:56:59 AM PDT

              [ Parent ]

      •  There is significant risk for buyers of reverse (4+ / 0-)
        Recommended by:
        kmfmstar, Sparhawk, WillR, hmi

        mortgages.  There is high risk from increases in interest rates and inflation.

        There is also risk that the insurance part does not pay off if there is a large scale decline in housing prices.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Sun Aug 18, 2013 at 08:17:06 PM PDT

        [ Parent ]

    •  note: elderly couple can still lose home (9+ / 0-)

      and be evicted if taxes are not paid or home is not maintained among other conditions

    •  I told my parents (11+ / 0-)

      I expect you to live a good long life.

      However, when the inevitable does happen, I would be just as happy if you had spent everything down to close to zero. I want my parents to live as well as they possibly can and I prefer to earn my own money.

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Sun Aug 18, 2013 at 08:15:19 PM PDT

      [ Parent ]

      •  Some believe that... (2+ / 0-)
        Recommended by:
        Dr Swig Mcjigger, ColoTim

        ...the ultimate goal is to die with as much debt as possible and enjoy life as much as possible until the last breath. I certainly can't criticize that viewpoint (lenders factor in risk when loaning - I feel little sympathy for them if they screw up that calculation).

    •  Grab On! Don't Let That Other Crab Climb Out! nt (3+ / 0-)
      Recommended by:
      ColBatGuano, smartalek, trumpeter

      On the Internet, nobody knows if you're a dog... but everybody knows if you're a jackass.

      by stevemb on Mon Aug 19, 2013 at 03:47:57 AM PDT

      [ Parent ]

  •  Could've sworn that was Kelsey Grammer. (1+ / 0-)
    Recommended by:
    trumpeter

    Same difference.

    Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

    by corvo on Sun Aug 18, 2013 at 07:14:06 PM PDT

  •  IMO an inheritance isn't a middle class value. (17+ / 0-)

    Anyone offering to give a person a deal is trying to make money off that person. Of course a reverse mortgage is going to cost an "estate" the most amount of money they can wrangle. But the cost is not to the "person" but their estate. Not something I would recommend or plan on but it's one of many ways to wrangle money out of one's assets.

    But, I'm wonder why you think this is or should be a goal:

    build a nest egg that can be transferred to the next generation.
    To me a person should produce more than s/he uses (including dependents while they're dependents) and plan and live according to that basic formula so assets last until death. If there's any left over to pass on then that's fine but not an objective. Why would it be?
    •  Because You Might Love Your Children? (11+ / 0-)

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Sun Aug 18, 2013 at 07:25:58 PM PDT

      [ Parent ]

      •  What does love have to do with an inheritance? (14+ / 0-)

        I expect nothing and only hope my parents and in laws live as long as possible and can do so financially independent even if they spend every last cent. I wish they'd spend more and live it up as much as they can.  Anything left over gets passed on but that's just not the goal IMO. Helping your kids get a start in life presumably is a very high value goal but for the sake of this conversation I assume that happened many years before someone dies.

      •  or the question of stewardship? (11+ / 0-)

        my children are the fourth generation on the land; I feel an obligation to my father and grandfather to be a good steward and pass their legacy to my children in at least as good condition as I received it  

        •  Now that makes a lot of sense to me... (1+ / 0-)
          Recommended by:
          ColoTim

          ...as a traditional and coherent goal, albeit your stewardship can only last until death. Just like there's no guarantee of an inheritance (so there shouldn't be an expectation) there's no guarantee your kids will value that land.

          But I like your stewardship phrasing, it's another way of saying one owns their own land, has not lost it, and does not need to hock it to live out their days.

          •  I have known life insurance to be mortgage (4+ / 0-)
            Recommended by:
            ladybug53, kck, Thinking Fella, ColoTim

            lifter for farmers, who when faced with foreclosure, went behind the barn with a shotgun and had a hunting accident.  Over the last 40 years I know of at least 5 cases of this.  The obligation of stewardship runs deep and you are not going to be the generation that lost what previous generations built up

            After my death, the farm passes into a trust.  

        •  That sounds like a special situation (2+ / 0-)
          Recommended by:
          kck, wa ma

          In your case, we're not talking a typical suburban tract house but a property that is a true "legacy"--not just something that can be turned into cash.

          "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

          by Alice in Florida on Sun Aug 18, 2013 at 08:15:53 PM PDT

          [ Parent ]

          •  What's with all this crap about begrudging (6+ / 0-)

            kids an inheritance?  My God, that should be the right of the owners....several posters are, in effect, saying,"leave it to a bunch of oligarchs instead of my kids, cause the kids should work for it.....blah blah blah".  

            Why would a progressive want to support an arm of the very institutions that have wrecked the nations economy?  Some of you sound like right wingers or libertarians....who gives a damn that its "okay" to leave it to the kids cause its a "legacy" instead of just cause its your kids?  If my kids an ax murderer but I want to leave him all my stuff, I earned it.  WTH

            The primary concern is whether or not a giant corp. is legally sanctioned to screw desperate, old people.  

            Please save a child's life. www.signon.org/sign/sarasota-sheriffs-office

            by kmfmstar on Sun Aug 18, 2013 at 08:31:56 PM PDT

            [ Parent ]

            •  Nobody's saying leave it to oligarchs (10+ / 0-)

              And I don't think anyone would support taking a reverse mortgage from a company that advertises on TV.

              In some very particular cases, persons with the benefit of proper legal/financial advice who know they are going to stay in their  homes may benefit from a reverse mortgage. It's not a good idea for most people.

              But the idea that young people should depend on an inheritance instead of having the opportunity to work and save on their own is disturbing, it seems to me to be the product of our post-Reagan decline, that good paying jobs are a thing of the past and all we an hope for is a chunk of grandma's fortune to see us through. Grandma didn't have an inheritance--her "fortune" was saved because she lived in a time when Democrats held the majority in Congress for forty years, when unions were respected, when the wealthy paid high taxes, etc. What young people (and Americans in general) need is an understanding of how to take back wealth from the plutocrats, which means electing people who will rein in the hedge funds, tax great fortunes down to size, create (government) jobs fixing infrastructure, teaching, providing health care, all the rest...the things this country used to do.

              "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

              by Alice in Florida on Sun Aug 18, 2013 at 08:53:00 PM PDT

              [ Parent ]

              •  Whether the company advertises on tv (3+ / 0-)
                Recommended by:
                ColBatGuano, smartalek, bryduck

                or not doesn't make it a lousy or great consumer product in and of itself.  The consideration, from the standpoint of government, should be if it is good for the economy and whether or not it creates victims.  Of course, my viewpoint is pie-in-the-sky because its been 30+ yrs since gvt. gave two shits about the middle class.  To rephrase, it is the product itself that should be scrutinized.  And it is my belief that the product, as it is now legal, is tipped way overmuch in favor of the lender and not the borrower.  Big banks have sodomized us and this is just another form of it.

                Please save a child's life. www.signon.org/sign/sarasota-sheriffs-office

                by kmfmstar on Sun Aug 18, 2013 at 10:35:33 PM PDT

                [ Parent ]

                •  The fact that they advertise means they make (2+ / 0-)
                  Recommended by:
                  OleHippieChick, kmfmstar

                  money doing it. But, if someone has worked his/her entire life, and paid for a house, the equity in the house may be worth more to them than the amount they pay to enable a monthly income. Throwing in the loss to heirs is just mucking up the discussion.

                  •  Actually, if there is a loss to heirs (1+ / 0-)
                    Recommended by:
                    ColBatGuano

                    that is another abuse to the homeowner.  The only reason there is an inheritance in the first place is that the owner outlived the enjoyment of their own assets.  Nobody can plan their death at the depletion of their assets exactly, unless suicide.  

                    So I agree that it is a side issue, but since it was brought up the truth of the matter is that its another point of exploitation.  

                    Please save a child's life. www.signon.org/sign/sarasota-sheriffs-office

                    by kmfmstar on Mon Aug 19, 2013 at 06:18:08 AM PDT

                    [ Parent ]

                •  The significance of TV (0+ / 0-)

                  is that this is a "product" that is highly complex and requires professional advice to make a good decision--when it is pitched directly to consumers via TV spots featuring a popular actor, that is the sign that the particular company in question is taking advantage of low-information consumers to sign them up without proper representation and is, therefore, a scam. These ads run in the same rotation as all kinds of scams, from miracle weight-loss pills and wrinkle creams to fake health insurance that claims to be based on the ACA but is actually just some bulls*** that won't be legal once the ACA exchanges and the individual mandate are in effect. There are also insurance scams aimed at veterans and seniors. What it all comes down to is that these days government does not give, as you say, two shits about truth in advertising anymore.  

                  "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

                  by Alice in Florida on Mon Aug 19, 2013 at 09:50:27 AM PDT

                  [ Parent ]

            •  No one's saying that. (3+ / 0-)
              Recommended by:
              Justanothernyer, melfunction, bobtmn

              If a retiree has a home in which they have equity AND is short on money to live on then their only choice if to live off of their equity.

              There are a few options, assuming there is indeed equity - (1) sell your home and live off of the proceeds in a less expensive home or rental, (2) do a reverse mortgage and live out your days in your home, (3) bring in renters and live with them. In both 1 & 2 the home and equity are planned to be gone at the end of life. It's a matter of how one plans to finance their daily life after working.

              I really don't understand what you're saying. There's no begrudging kids. If there ends up being more than was needed to live on the assumption is that goes to the kids.

               

              •  Well, read these posts; (1+ / 0-)
                Recommended by:
                ColBatGuano

                WillR, bobtmn, kck and Alice in Florida.  The discussion becomes "why should we protect the heirs with tax dollars", "do you think that people with assets at the end of their lives should be subsidized by other taxpayers so they can pass those assets onto their heirs" and "in your case, were not talking a typical suburban tract house but a property that is a true "legacy"--not just something that can be turned into cash".  That sounds like a degeneration into someone's right to do what they see fit with their own assets vs predatory and abusive financial products.  It also suggests that perhaps tax laws should be tweaked to reward someone for allowing a huge lending institution to screw them instead of leaving anything to the kids.  We are, of course, discussing the lower and middle class.....the well to do don't need reverse mtgs, and on the oft chance that they are so stupid their financial advisors would dissuade them.

                Just responding to what I read.

                Please save a child's life. www.signon.org/sign/sarasota-sheriffs-office

                by kmfmstar on Sun Aug 18, 2013 at 11:02:15 PM PDT

                [ Parent ]

                •  What are the options you're suggesting? (1+ / 0-)
                  Recommended by:
                  Justanothernyer

                  I don't see rev. mort. as predatory or abusive. To me paying interest is a bad idea and only ever considered when it's in your own best benefit such as with a mortgage for an affordable home at a sustainably affordable cost. Using a home to live in to raise a family and slowly increase is equity has been a common middle class retirement plan. Once retired, the same size home is not necessary, less functional, perhaps overall it's less justifiably affordable, and becomes an asset more valuable in its readiness for liquidation.

                  Socially, policy wise, what are the social alternatives in our current incarnation of retirement options?

                  The multigenerational family farm example was not just s real estate asset bt also has an additional intangible value in its past, it's a legacy, and homes to many modern homeowners are not a legacy but an asset (hopefully!). Some homes have the same but that's a luxury most of our current middle class doesn't possess and many a small family farm does.

                  These are difficult decisions and I don't know anyone who used a rev. mort. or rec'd it. But it's an option for people with few others and no one is forced into it.

                  •  What about selling? (0+ / 0-)

                    I've said this several times now, it is a shame that our government does not look out for the best interests of its citizens.  Several posters have stated how it is done, the predatory nature of it and how it is robbing middle income seniors of what little wealth ( if you can call it that) they have built over a lifetime.

                    Go ahead, get one.  Get two or three.  Hell, get a dozen for all I care.  My observation still stands; we should expect more protection from our gvt. by way of big business regulations.  We haven't for a very long time and look at where we are.

                    That is all.

                    Please save a child's life. www.signon.org/sign/sarasota-sheriffs-office

                    by kmfmstar on Mon Aug 19, 2013 at 04:54:26 PM PDT

                    [ Parent ]

        •  Then, donate it to a land trust now. (0+ / 0-)

          The odds that your grand and great grandchildren will share the same values is pretty small.

        •  Is that a century farm? I've always admired those. (0+ / 0-)



          Is it true? Is it kind? Is it necessary? . . . and respect the dignity of every human being.

          by Wee Mama on Mon Aug 19, 2013 at 05:22:48 AM PDT

          [ Parent ]

      •  Gooserock, I rec'd (4+ / 0-)

        your comment, but not all of us have kids to leave assets to. And some folks have no cash, but $200k in the value of their home. I wouldn't begrudge someone 'cashing out' a portion of that $200k. If a bank makes out in the deal, so be it. I'm leery of the reverse mortgage deal--but it is a good concept for some.

        Caveat emptor.

        The better I know people, the more I like my dog.

        by Thinking Fella on Sun Aug 18, 2013 at 08:52:41 PM PDT

        [ Parent ]

    •  I think it probably goes back to the middle class. (10+ / 0-)

      ....not being able to build wealth, which is usually done generation to generation.

      •  Maybe that depends of one's definition of wealth. (3+ / 0-)
        Recommended by:
        Be Skeptical, Odysseus, Sparhawk

        A wealthy person to me is one who has the health and fortune to work for a living until they comfortably retire, pay for everything they need and desire without credit and die at 100 yrs old without debts.

        Everything else is gravy and while my kids will get gravy it's not and never was in my financial plan.

        In fact, I have seen a lot of financial plans and no one I know of worth less than $3mil worked and/or invested so as to leave an inheritance to their kids.

      •  The way middle class families build "wealth" (4+ / 0-)
        Recommended by:
        Sparhawk, jazzmaniac, WillR, melfunction

        is by passing on values, especially the value of a good education, which is true wealth. A pecuniary inheritance is another matter altogether, and sometimes (often?) it comes between family members and can destroy relationships.

        "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

        by Alice in Florida on Sun Aug 18, 2013 at 08:18:53 PM PDT

        [ Parent ]

  •  Inheritance is an anachronism (13+ / 0-)

    It's original societal value was to pass on the family farm, the tools of a trade or a business that provides income for the next generation.  Or in the case of titles or large wealth to maintain the power structure and pass "control" of society to those trained to manage.

    In today's world where children rarely follow in their parent's footsteps and the store house of wealth for most Americans is liquid assets and homes, as opposed to assets that involve occupations, inheritance serves little purpose.

    The entire premise of this diary - that the goal should be to pass on wealth - is flawed.  And reverse mortgages are a valuable tool for monetizing the wealth that an individual creates over his lifetime.  Properly used they are useful in retirement planning.

    You can own something you have debt on.  Ownership is control and in reverse mortgages you control the home until you die.

    •  I take it your family sold the farm in the past? (5+ / 0-)

      I hope you realize that those of us who still live on our family farm are not likely to agree with you

      •  This is a case where inheritance makes sense (0+ / 0-)

        Perhaps I should have said that.  I believe passing on the means to earn an income is societally useful.  But just passing on liquid wealth is not.

        •  False dichotomy. (4+ / 0-)

          > ...passing on the means to earn an income is societally
          >  useful.  But just passing on liquid wealth is not.

          So, reverse mortgages are OK for townies but not for farmers? Doesn't that assume that elderly farmers are somehow less likely to find themselves short of cash?

          And BTW, what if that evil "liquid wealth" allows my grandkids to afford a top-flight university (or any at all!) -- why doesn't that count as "the means to earn a living?"

          My only gripe with reverse mortgages is the taxpayer-insured bank windfall.

          ...yet another case of privatized profits / socialized risks,

          I think you're some kind of deviated prevert.

          by ColBatGuano on Sun Aug 18, 2013 at 09:52:15 PM PDT

          [ Parent ]

          •  Wow, you missed the point completely (0+ / 0-)
            passing on the means to earn an income is societally useful.  But just passing on liquid wealth is not.
            Providing for an education is certainly part of passing on the means to make a living.

            In my mind anyone who wants a reverse mortgage can get one.  But if your goal is to preserve the family farm it might not be the best vehicle for you.  On the other hand, if old people are foregoing the fruits of their labors in order to leave cash to their loved ones, what purpose does that serve.

            The diarist started from the premise that the goal of old age is to leave money to their heirs.  I reject that as the primary goal, particularly when it is in the form of cash to heirs who will be consumption based.  from a societal standpoint what does that accomplish.  And if the old folks are foregoing necessities, what does that indicate about our values?

            •  Family wealth is family opportunity. (1+ / 0-)
              Recommended by:
              smartalek

              1> Providing for an education is certainly part of
              1> passing on the means to make a living.

              2> On the other hand, if old people are foregoing
              2> the fruits of their labors in order to leave cash to
              2> their loved ones, what purpose does that serve.

              So, passing on cash is ok if it goes directly to my grandkids' education, but NOT ok if I give it to my children -- who can then afford to retire their mortgage early, and thus afford to pay for college for the grandkids "by themselves?"

              OTOH, maybe they'll skip the grandkids' education and use the cash to buy themselves a family farm. Would that meet with your approval?

              Family wealth is the difference between a (usually inherited) middle class standard of living and a (usually inherited) cycle of poverty.

              ...cash is fungible,

              CBG

              I think you're some kind of deviated prevert.

              by ColBatGuano on Sun Aug 18, 2013 at 11:07:26 PM PDT

              [ Parent ]

              •  I only said inheritance is an anachronism (0+ / 0-)

                What is your problem?  I merely pointed out that people should forgo access to the wealth they've accumulated in their houses so that they can leave money to their heirs was foolish.

                I don't care what you do with your wealth.  I don't care how your heirs spend it.  My only point was that inheritance served a much more important purpose for society when it was the passage of property and real assets rather than cash.  You can keep taking my comments to whatever extreme you want, I couldn't give a shit.  You seem like one of those people who just lives for an online argument.

                Have fun playing with yourself.

                 

      •  I think the 2 situations (2+ / 0-)

        are not comparable. For some, say...those without kids or siblings, a reverse mortgage may be a wise way to 'spend' money that will only be realized when the house is sold--and if that is after you're dead, who cares? You get to live in the house AND spend some of its 'worth'.

        In your case, a reverse mortgage would be everything from dishonoring your ancestors to screwing your kids. Hence, definitely not for you. Your options are(actually you have more than this, I'm just thinking out loud here) paying off the farm before you die so it is owned free & clear, life insurance for you so your heirs can pay off the farm when you die--or any other expenses for that matter, or a trust(which come in more forms than this non-atty could ever list) that establishes a vehicle to transfer the assets to the next generation.

        I think a reverse mortgage is a way that some people can tap the value of their home before they die, while living in it. It isn't for anyone that has someone(s) they want to leave the home/farm to when they die. And having said that, I'm really only addressing the concept of a reverse mortgage. In reality, while maybe a good idea for some, the industry itself is fraught with bad deals, traps, low amounts paid for the home...there are many unscrupulous folks involved in the industry. That's too bad, because I think it is a good concept--for some folks to use.

        Fwiw, my grandparents sold the farm(and died) before I was born. My dad worked really hard so I wouldn't have to work on a farm as he did. That he held it against me that I didn't know farm life notwithstanding, my situation is that I have no farm to pass on, nor heirs to inherit it. I can leave my hut to anyone / any charity / any friend--or I can spend a 1/3 of its value while I'm still breathing...caution, as with any financial transaction, is paramount.

        Peace.

        The better I know people, the more I like my dog.

        by Thinking Fella on Sun Aug 18, 2013 at 08:38:12 PM PDT

        [ Parent ]

      •  And I assume you wouldn't opt... (0+ / 0-)

        ...for a reverse mortgage - no one is forced to take out a reverse mortgage and it sounds like it's likely not for you.

        Every person's situation is different - we are a melting pot and financial products reflect that.

    •  That's been the formula in my family (1+ / 0-)
      Recommended by:
      noble experiment

      The ones who will inherit anything are those who've earned a stake during their lives by working hard to build several family businesses.  Those who've chosen other options have done so because they have other interests.  The whole idea is that if you've earned it, it's yours;  if you haven't, it isn't.  Pretty simple.  Fair, too.

       

      Romae in die non combureretur.

      by Not A Bot on Sun Aug 18, 2013 at 07:54:22 PM PDT

      [ Parent ]

  •  Like easy credit (13+ / 0-)

    ...reverse mortgages are a phony substitute for a balanced economy that does not favor corporations and the 1%. And also like easy credit, they give consumers the illusion of prosperity at the expense of a stable, certain tomorrow. Some consumers in certain, specific circumstances may find reverse mortgages appealing but overall it is simply another way for financial institutions to make more money off of what used to be the American middle class. There is no substitute for an adequate family income that rises with overall national prosperity. Instead we have a vampire economy that sucks the lifeblood out of ordinary Americans in order to enrich financial institutions, corporations and the small percentage of Americans whose total income derives from their investments.

  •  First time I saw that ad I said "No way". (9+ / 0-)

    Blatant snake oil.

    Evil.

  •  I've been the trustee of estates that have (16+ / 0-)

    included and not included reverse mortgages and at the end of the day the same thing happens to the money. It's spent.  Either by the heirs or the home owners and yes they are as much a home owner as anyone that has a mortgage.  I've seen seniors have a much better retirement than otherwise. I've seen some dirtbag heirs piss away the money.  Is it right for everyone?  Of course not.  For some people it's a miracle.

    Based on my real life experiences you don't know shit.  But you might have different real life experiences.

    Never argue with an idiot. They will drag you down to their level and beat you with experience.

    by thestructureguy on Sun Aug 18, 2013 at 07:21:17 PM PDT

    •  Problem for the old folks is they're stuck. (1+ / 0-)
      Recommended by:
      libnewsie

      Can't really sell the house and downsize or move to long-term care, because then they'd lose everything.

      I suppose they can just take the loss and hope medicaid will take care of them.

    •  sounds to me that someone fell down in the (0+ / 0-)

      estate planning.  The situation you describe would require a spendthrift or bypass trust.

    •  I seriously considered HR' ing (6+ / 0-)

      your comment for the next to last sentence, but I figure there are others reading this thread and your opinion should remain exposed.  The diarist explained RM's well and deserves a little respect for that.  Furthermore, you miss the point....reverse mortgages are predatory lending and should not be supported by those concerned with the welfare of others.  As progressives, buying into the argument that "some people are helped" can easily be translated into "our elderly are screwed but they are less screwed this way"; the marital equivalent of " he drinks and cheats but he doesn't beat me".  

      My husband took early retirement from a company he worked for for 24 yrs, and his take home, including 401k and severance pay was equal to a yr and a half salary.  We can't do a reverse mtg because we are underwater, but if we could, we wouldn't.  I'll live in my car before giving in to these bastards.  Someone has to take a stand.  

      They are determined to strip us of everything we have.  I'm a Kamakaze.....they'll get nothing, and I'll die regardless.

      Please save a child's life. www.signon.org/sign/sarasota-sheriffs-office

      by kmfmstar on Sun Aug 18, 2013 at 08:02:52 PM PDT

      [ Parent ]

  •  On the Voter's Legislative Transparency Project (14+ / 0-)

    website, there is an explanation of the ALEC "model legislation" bill called "ALEC’s Reverse Mortgage Enabling Act", which is working its way through state legislatures around the country.  The bill finds more ways to screw old people, and includes language that can make poor seniors ineligible for Medicaid, among other things.

    Take a look at this well-written article and you will see even more ways that elderly people can be separated from their equity and dignity in old age.  Here is a link to the article.

    http://vltp.net/...

    Republicans are like alligators. All mouth and no ears.

    by Ohiodem1 on Sun Aug 18, 2013 at 07:22:01 PM PDT

  •  Reverse Mortgages refute the old saying (2+ / 0-)
    Recommended by:
    Miggles, a2nite

    that you can't take it with you.  You might not be able to take all of it with you, but the proper financial consultant can show you ways to take as much of it with you as possible.  

    That is the American way.  Every dog for himself.

    Through early morning fog I see visions of the things to be the pains that are withheld for me I realize and I can see...

    by Keith930 on Sun Aug 18, 2013 at 07:30:35 PM PDT

  •  The fact that they still "own their home.." (5+ / 0-)

    ..is likely not a benefit. Instead, it probably just means the owner is still liable for risks, expenses, etc.

    Tails you lose, heads they win. America.

    What is so unnerving about the candidacy of Sarah Palin is the degree to which she represents—and her supporters celebrate—the joyful marriage of confidence and ignorance. SAM HARRIS

    by Cpqemp on Sun Aug 18, 2013 at 07:32:02 PM PDT

  •  My wife and I are exactly in this "reverse (7+ / 0-)

    mortgage" as a possibility situation. We're running out of our nest egg that took a big hit in the crash, and the rest is Social Security. The other possibility is selling the house, taking the profit and moving into a smaller home or condo out of our area, and paying it off. Some have already told us to NOT do the reverse mortgage route. Besides, my wife is not yet 62 (I'm past that) so that complicates things. (Still can be done, but it's a perilous situation). More intense thinking needed on our parts.

    "They come, they come To build a wall between us We know they won't win."--Crowded House, "Don't Dream It's Over."

    by Wildthumb on Sun Aug 18, 2013 at 07:33:18 PM PDT

  •  How exactly ... (10+ / 0-)

    is taking out a reverse mortgage different from selling your house and moving into a retirement community? Both of these solutions use the wealth that you've amassed in your house to provide for your retirement.

    Now, if you had some statistics showing that reverse mortgages gave a lot lower value (measured in APR or some similar statistics), you might have a diary. All you have right now is a rant.

  •  is that Thompson (0+ / 0-)

    in your first picture? Without a cut line, I couldn't be sure.

    There is no question that there is an unseen world. The problem is, how far is it from Midtown and how late is it open? -- Woody Allen

    by Mnemosyne on Sun Aug 18, 2013 at 07:35:59 PM PDT

  •  average retiree has net worth of $150K (10+ / 0-)

    most of it in their home equity as noted.  401Ks and IRAs took a hit in 2007 which they are barely recovering from.  Problem is average retiree was forced to tap these funds to cover shortfalls in SS so funds were withdrawn in a down market.

    I looked into a reverse mortgage years ago.  First thing I was told was I was limited to 80% of FMV of home, based on state tax appraisal.  Then it was explained to me if I did not pay taxes on house or keep up insurance or adhere to other requirements, I could still be foreclosed.

    Then the kicker came in when I learned kids had to redeem home within a certain period or lose it.  So this means I would mortgage my home (or de facto sell it to bank retaining a life time right) in a down market for 80% of appraised value.  Any appreciation in value would accrue to the lender.  If during that time, I violate the terms of the agreements (repairs and upkeep are my responsibility to insure home does not lose value) I can be kicked out.

    So for a $100K home today, I can borrow 80K less any existing mortgage amounts and then when I die in 15 years, the home is now (hypothetically) worth $125K and belongs to bank unless kids can pony up $80K  (I did not include any interest attached to the loan)

    In reality this is a straight sale      

    •  "...to cover shortfalls in SS?" (1+ / 0-)
      Recommended by:
      Deward Hastings

      I don't think the probably of withdrawing funds in the recession had anything to do with Social Security, which never had a "shortfall." Retirees tap their retirement funds all the time, that's what they're for--but with dividends down they may have been forced to withdraw from their shrunken principal. Worse still, many nearing retirement found themselves out of a job and had to reach into their retirement accounts to get by until they qualify for Social Security.

      "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

      by Alice in Florida on Sun Aug 18, 2013 at 08:30:23 PM PDT

      [ Parent ]

      •  I was unclear (0+ / 0-)

        I meant the amount that SS pays each retiree vs the amount each retiree needs each month to survive.  While many people do have to do so, SS should not be a person's only source of income.  A life on SS as the only income is a very bleak existence  

    •  I'm sure your heirs are glad you didn't do it. nt (0+ / 0-)

      Never argue with an idiot. They will drag you down to their level and beat you with experience.

      by thestructureguy on Sun Aug 18, 2013 at 08:37:26 PM PDT

      [ Parent ]

  •  I don't have any issue with (9+ / 0-)

    the concept of a reverse mortgage - allowing older people to tap the equity in their home for current expenses.

    For many people who do not have the defined pension plans of the past generation, their home equity will be the substitute and thank Heavens they have the option. It's their equity to with as they please.

    It is my understanding that a reverse mortgage is expensive, with a lot of upfront fees, etc. That may be the point of this diary, but it's hard to tell, the writer seems to be against the concept in general. The alternative is to sell the home outright. The equity will still be spent on current living expenses, so what's the difference?

    “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

    by Phoebe Loosinhouse on Sun Aug 18, 2013 at 07:39:17 PM PDT

    •  Living needs change as you get older. (4+ / 0-)

      Need less space, more conveniences with regard to medical care, banking, shopping -- if your house is in the middle of nowhere and has a high upkeep, you're up a creek.

      •  That's why a reverse mortgage (7+ / 0-)

        only makes sense if you want to stay in your house and the house and the location and the cost of maintenance and upkeep, taxes, etc. are doable - doesn't that go without saying?

        If a home is isolated and far from shopping and services, a person could sell it and buy another home in a better situation and then still have the option of a reverse mortgage if they need it.

        Or they can rent an apartment. It's a CHOICE.

        “Human kindness has never weakened the stamina or softened the fiber of a free people. A nation does not have to be cruel to be tough.” FDR

        by Phoebe Loosinhouse on Sun Aug 18, 2013 at 08:00:26 PM PDT

        [ Parent ]

    •  I have a big problem with them, (1+ / 0-)
      Recommended by:
      saluda

      namely with how they are being sold.  These are being offered (on TV no less!) as a first option for people when they should consider a reverse mortgage only after exhausting all other options first.  A lot of people are going to be scammed by this.  The CFPB needs to a hard look at reverse mortgages and regulate them.

      •  A fool and their money... (1+ / 0-)
        Recommended by:
        Justanothernyer

        ...are soon parted. That's just a fact of a market economy.

        Hire an accountant , lawyer, and/or financial adviser to evaluate the deal if you don't have the ability to do so yourself. If you don't want to, don't include an RM on your palette of options to consider.

        If the agreed upon contracts are not adhered to by one party or the other, of course the other party has a recourse in the courts (and should).

        But, not bothering to figure out if a major investment decision makes sense for you - no sympathy. RMs are very helpful to some, and less than useless to others -- but if we regulate the market so that innovative products can't be offered, the opportunity is not available to anyone. Should we limit the profit on scented candles because some are overpriced and consumers buy them anyway? I think not.

        I'm okay with requiring disclosures up the wazoo, but not with reducing options just because some consumers think they can "beat the bank" and are wrong about that.

  •  thank you for bringing this topic up (6+ / 0-)

    Five of us inherited my parents' no mortgage home .. well, the mortgage had been paid off years before my Dad died.. when my mom died nine years later, my siblings told me to stay in the house (I had been her caregiver) .. and basically I paid the taxes, the utilities and took care of the house with all the stuff that belonged to my parents .. Since I am a retired state employee of Texas university system, my pension is not that much but between it and social security I am so much better off than most people my age.   My brother, currently employed, lives with me in a basically big house built for a family of seven.   Since the house is owned by all five of the siblings, it is not really my or my brother's house.  The others live in other cities and have their own homes, so I was thinking of getting a reverse mortgage so I could pay the others their portion of the house's worth and then it would be my house .. and if I wanted to go live in a smaller place I could .. but the fact that Fred Thompson was pushing so hard and doing so for a company I am suspicious of has given me pause.... but then Henry Winkler has started doing commercials for these reverse mortgages also ... different company.... and I am so confused ..

    a fellow parishioner who is also a real estate person and a very conservative Republican has really discouraged me from considering it ... and that really gave me pause .. even though she is a republican, she is honest and has been very helpful to me in other situations ...  
    The house is almost 50 years old and is starting to need lots of repairs... which can be difficult on my brother's and my combined incomes ...right now we are facing replacing a built in wall oven combo ... and the garage door need replacing .. I  am not complaining..I am so fortunate compared to others but so confused as to what is the best way to proceed ... thanks for letting me vent my fears ... thank you for this article ..because basically it reinforced something that I feel strongly ... if Fred Thompson thinks it's a good idea, run like hell in the other direction ....

    Give your heart a real workout! Love your enemies!

    by moonbatlulu on Sun Aug 18, 2013 at 07:40:01 PM PDT

    •  Just based on what you've said (2+ / 0-)
      Recommended by:
      Thinking Fella, WillR

      it sounds like the reverse mortgage is not appropriate--it sounds like what you really want to do is sell the house, take your (and maybe your brother's) share and get a smaller, newer house and distribute the rest of the proceeds to your siblings...

      One aspect others have mentioned is that, with a reverse mortgage, you have to stay in the house or you lose it (or have to pay back the money with interest, probably).

      If you share ownership of the house with several siblings, you might not even qualify for a reverse (or other) mortgage without all them signing on.

      "All governments lie, but disaster lies in wait for countries whose officials smoke the same hashish they give out." --I.F. Stone

      by Alice in Florida on Sun Aug 18, 2013 at 08:36:59 PM PDT

      [ Parent ]

    •  You're lucky your siblings aren't suing you (0+ / 0-)

      for waste of an asset.  The value of the property is declining if the up keep is to much for you.  On the other hand if you keep up repair with your own money they benefit at no cost to them.  Many families would not allow this situation.  Sure at first they are fine with it but once they see money not in their pocket they start getting a little less friendly.  You're very lucky.  

      It sounds like selling is the best option but you know your situation better than anyone on here.  Good luck.  

      Never argue with an idiot. They will drag you down to their level and beat you with experience.

      by thestructureguy on Sun Aug 18, 2013 at 08:44:26 PM PDT

      [ Parent ]

      •  oh, the other siblings would help with major (0+ / 0-)

        repairs ... (they are helping with the oven replacement .. btw, built in combo ovens should be outlawed!  .. one part goes out and you have to replace everything!)  ...

        and none of them are pressing about their share ...
        but I have been curious about the reverse mortgage ...

        a slightly different question:  several years ago, I remember banks offering certain kinds of loans with people using their home equity as collateral ...is this the same thing?
        because I seem to remember that there was some kind of shadiness associated with those loans ... and as I said before, I think anything that has Fred Thompson's endorsement must be shady

        Give your heart a real workout! Love your enemies!

        by moonbatlulu on Mon Aug 19, 2013 at 11:48:27 AM PDT

        [ Parent ]

  •  I knew it was a bad idea when I first (4+ / 0-)

    heard about reverse mortgage.

    The most disturbing part of the predatory lending scams for me was the idea that even my own daughter had been robbed of her paternal great-grandmother's house, something that she should have inherited. Predatory lending robbed a whole lot of people but it also robbed their descendants.

    Next thing they do is dream up a way to tempt people to deliberately deprive the next generation of inherited wealth through property ownership with reverse mortgage bullshit. They're gonna steal your grandkid's house if it's the last thing they do. It's completely obvious to anybody who's been following the patterns of predatory mortgage lending. The last thing the middle, working-poor class had was home equity and they're coming after it in all kinds of ways. If they can't outright steal it from you, you'll be duped and tempted into giving it away for nowhere near what it was worth.

    "It's not enough to acknowledge privilege. You have to resist." -soothsayer

    by GenXangster on Sun Aug 18, 2013 at 07:40:35 PM PDT

  •  FDRs plan (9+ / 0-)

    Was that you would have a decent, secure job that enabled you to save and build a nest egg. Your company would provide a pension. Social security would supplement the first two, providing a secure, dignified retirement for most Americans. Plutocrats and Reaganomics dismantling the plan. No unions so no decent wages or job security. No defined benefit pensions, replaced buy underfunded 401ks, which enrich Wall Street but workers, not so much. Social security now under attack, and Dems not making me confident about vigor of their defense. Reverse mortgages one more nail on the coffin. Bring back the county poor houses.

    •  "Dems not making me confident about vigor of their (0+ / 0-)

      defense?"

      As I recall, it was this Administration that called for the Bowles-Simpson Fiscal Commission, which resulted in the draconian proposals to cut Social Security.

      Bear in mind, the Commission's proposal, The Moment Of Truth, contained more and deeper cuts than just the "Chained CPI."

      Please take a moment to read Social Security, Section V, Pages 49-54, of the proposal.

      It's a real "eye opener."

      Here's a link to the proposal, The Moment Of Truth.

      Mollie

      "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


      hiddennplainsight

      by musiccitymollie on Sun Aug 18, 2013 at 08:13:52 PM PDT

      [ Parent ]

  •  My mother's choices (13+ / 0-)

    late 80s, in need of full-time caregivesr, living on $1500/mo Social Security and my father's small pension 25 years after his death.  

    1) Go into a nursing home
    2) Have her children pay for her care (nearly $5,000/mo).
    3) Take out a reverse mortgage on the house she and my father had bought in 1963 in California that had appreciated about 4,000%, allowing her to stay in her home, keep the caregivers she knew and trusted, and remain self supporting.

    Guess which one she chose.  

  •  do you hate your kids? (5+ / 0-)

    are they good-for-nothing lowlifes?

    are they the scum of the earth?

    do you want to do everything in your power to screw them when you pass away?

    do you want to make sure they get absolutely nothing, no matter what it takes?

    hi, i'm fred Thompson...

  •  Rev Mortgage *in principle* can help homeowners (4+ / 0-)

    obtain what is a type of longevity insurance, along with asset liquidity and asset divisability (all of which can benefit their heirs directly or indirectly),

    but of course in practice, like for all financial transactions, the devil is in the details, where banks and their advertisers and lobbyists tend to keep doubling down on leveraging their superior knowledge, power and political influence to exploit those who have the least educational and financial ability to cope.

    This may be an area where a lot of value could be added through intervention by the Warren/Cordray Consumer Financial Protection Bureau.

    One concern I have about reverse mortgages is the socially detrimental incentives created for the lender, who makes more profit if the borrower dies faster.  Of course these types of incentives exist in other transactions, most directly and destructively in the anti-treatment and pro-death incentives already affecting for-profit medical insurers. (Fred Thompson could close the loop by advertising reverse mortgages on behalf of medical insurance companies). But still I think that there is cumulative damage to our society as we build more of these types of incentives into our financial system.

  •  This diary would be much more helpful if it gave (2+ / 0-)
    Recommended by:
    Justanothernyer, Cardinal Fang

    real life examples of reverse mortgages, exactly what fees were paid up front, exctly how much the homeowner received or received per month, and what the terms upon death or whatever were.

    •  The diary's linked NYTimes article is good (1+ / 0-)
      Recommended by:
      jpmassar

      But it does not fit that well with the diary's rant.  The diary also does not mention much about this being a Federal program.

      http://www.nytimes.com/...

      The most important way to protect the environment is not to have more than one child.

      by nextstep on Sun Aug 18, 2013 at 08:27:23 PM PDT

      [ Parent ]

      •  Here's an example. (1+ / 0-)
        Recommended by:
        kmfmstar
        Take a 67-year-old with a $370,000 home who withdraws a lump sum of nearly $200,000 (at a 5.65 percent fixed rate). The initial costs at closing could easily reach $16,563, according to ReverseVision, a reverse mortgage software company. (In addition, another $5,518 in servicing fees — to cover those $35 monthly fees over the estimated life of the loan — would be set aside.) Over time, don’t forget, interest and other costs are accruing on the mortgage. If the borrower dies at age 80, and his home is worth $720,700 at the time, his heirs would be left with just $100,000. And the bank will have pocketed about $364,000 in interest.
        •  Your math is way off. (0+ / 0-)

          $200000 + 20,000 in upfront fees accruing at 6% without making any payments would be $442,000 owed.  If the house is fortunate to appreciate over that time to $720,000, there would be almost $300,000 for the heirs.  And you are ignoring the income derived from investing the $200,000.  And you are ignoring the tax benefits of the mortgage deduction.

          Many reverse mortgages work by making a line of credit available the homeowner.  This means they only borrow money as they need it.  This will greatly reduce the interest costs over the holding period.

          Your comment is wrong on so many levels.

  •  attractive (4+ / 0-)
    Recommended by:
    kmfmstar, ladybug53, stevemb, ColBatGuano

    I agree with everything you state here, but, the bomb was in the qualifier at the beginning.

     

    please note that it is understood that for many this is the only option left.
    The only reason we're limping out of the recession is a monetary policy that has forced interest rates down.  That said, retired people are getting little or no return on their retirement nest egg--and their homes are often less valuable than they were 5 years ago.  What's left?  They are forced to hock their house--a reverse mortgage.  For example--a couple retire with a 401k worth $400,000--wow--great you'd think.  Except they will be hard pressed to safely get more than 2% interest on that money--$8,000.  Assume they withdraw $20,000 of principal each year--not only does the $8k return shrink--in 20 years, they're broke.  

    Where else can they turn for money?  Social security needs to be supplemented to stay middle class--so the banks win because they can wring out every last penny you saved.  The collapse is a gift that keeps on giving to the large banks--and a cancer for the middle class.

    Under capitalism, man exploits man. Under communism, it's just the opposite. John Kenneth Galbraith .

    by melvynny on Sun Aug 18, 2013 at 08:00:18 PM PDT

  •  "In the long run we are all dead"; If a reverse (4+ / 0-)

    mortgage can give an elderly person or couple cash NOW to live on- I say go for it. To pass on wealth to a future generation is a rich man's game which saps initiative and ingenuity. Let the wealthy dull themselves like this- I say, stay hungry!

    The price of anything is the amount of life we are willing to exchange for it.

    by theslinger on Sun Aug 18, 2013 at 08:01:49 PM PDT

  •  Approaching retirement (7+ / 0-)

    Well, there are some years to go, but the financial behemoth is not changing course a great deal.

    To young people I have several pieces of advice:

    1) Live below your means.  If you are in doubt, read "The Millionaire Next Door" for ideas

    2) Emulate most of the college professors you have known.  (That's me, too)  Put away 15% of your income off the top toward retirement, between you and your employer, and live your working years on the rest.  Can you do that?  Ummh, do you know anyone making 15%/year less than you do?  Are they living under a bridge and starving to death?  The virtue of the various retirement plans is that the money has certain legal securities.

    3) YMMV No-fee mutual funds are a wise decision. At the moment, bonds unless held to maturity are likely to lose value when interest rates finally go back up.

    4) That TV ad with the credit card going in the chipper is not bad advice.  If you buy something on credit, pay it off at the end of the month.  If you cannot afford to pay the credit card at the end of the month, stop spending with it until you have paid off.  If there is not enough money in the bank to pay for something you are buying on a  credit card, don;t buy it.  Remember, paying cash means you are buying the object once from the store, not once from the store and again from the bank.
    "What do I do for Christmas?"  Live below your means!

    Restore the Fourth! Save America!

    by phillies on Sun Aug 18, 2013 at 08:08:54 PM PDT

    •  One more (0+ / 0-)

      Don't wait until you're 50 to start putting money aside

    •  in theory... (0+ / 0-)

      In theory, this would work.  But, in fact, many who have done as you advocate -- saving a set percentage of their income; paying off credit card balances each month; investing in "safe" mutual funds -- are all helpful.  Yet in the current low interest environment, as noted by  melvynny several responses back, those who did scrimp with the thought that they would be reasonably secure have found that they have begun to deplete principle, as there is little or no interest income coming in, and the value of their investments themselves fell five or six years ago and have not rebounded.  It was not uncommon for people to lose 40% at the onset of the second Bush Depression, and it is not uncommon for those reduced balances to remain, still, at a much lower than anticipated level even now, although we keep hearing that "Wall Street" is booming.  One generation's wealth, in effect, was passed to another, in this case without the inconvenience of obtaining a reverse mortgage.  

      •  In what were they invested? (0+ / 0-)

        Stock indices more or less came back by this year, and NASDAQ is well above its pre-recession high.

        I strongly discourage relying on interest income; that does not work and is unsafe.

        Restore the Fourth! Save America!

        by phillies on Wed Aug 21, 2013 at 08:56:09 AM PDT

        [ Parent ]

  •  Oh, another financial issue (0+ / 0-)

    for those close to retiring.

    The following is not financial advice, but it may be a wake up call as to things you need to understand before you quit.

    You will hear an argument about whether you can safely take out, e.g., 5% of your money each year, or whether you risk running out of money.

    That "5%" does not mean what it sounds to be.

    I will use some round numbers here.  (You may also have Social Security or other guaranteed benefits.)

    Suppose you have $100,000 in various savings, etc.  You will have required minimum distributions (RMDs) from some savings plans.  An RMD means you must take the money out of the plan (and probably pay tax on it). It does not mean you are required to spend it. Get that point straight.  An RMD is simply a transfer between accounts with tax incoming.  It is not a requirement to spend.

    Suppose you take a 5% retirement rule.  In year 1, between all your savings, you would take out 5%, $5,000, as what you can spend that year from your savings.

    In year 2, under the common interpretation of "5%" you would take out the same amount plus an inflation adjustment, or, say, $5100, and you would take that out no matter what the markets have done in the meantime.  If the markets have tanked, you are taking out much more than 5% of what you have in your savings again, and can indeed run out of money.

    The common interpretation tries to treat your savings as something it is not, namely an annuity.  It's like a starring role in a Titanic movie.  However, your role is the Captain, plowing ahead at full speed as the ice bangs louder and louder against the hull.  I didn't say you shouldn't do it, and you might win the Blue Riband.  However, there are hazards here.

    On the other hand, if you just take out 5% of what is actually on hand at the start of the year, you can never run out of money by withdrawing too much. Your United Currycomb stock may fall to zero, but the withdrawals cannot kill you. The exponential has no zeros on the positive real line.

    Restore the Fourth! Save America!

    by phillies on Sun Aug 18, 2013 at 08:24:00 PM PDT

  •  can someone (1+ / 0-)
    Recommended by:
    ladybug53

    provide more information on exactly specifically what a reverse mortgage involves and then also provide more information on the little details which make this  just awful. i have no doubt that the details make it horrible. i kinda get what a reverse mortgage is but need more information. and i did go on the google but there is a lot of info out there and not sure where to go.

     i have an aunt who thinks this is the solution for her worries. my mother, on the other hand, is thinking of signing away her completely paid off house to a nursing home company for lifetime care.  i don't agree with either but i really have no control over these decisions.

    sorry, i think i need a reverse mortgages for dummies course

  •  FINRA has an excellent article on RMs (3+ / 0-)
    Recommended by:
    Justanothernyer, tardis10, CarolinNJ

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Sun Aug 18, 2013 at 08:37:21 PM PDT

    •  If I could recommend this exponentially, (1+ / 0-)
      Recommended by:
      nextstep

      I would.  The most important point made that hasn't been made in these comments is the part about interest on the borrowed money:  whatever amount you borrow against your house you pay interest on over the life of the loan.

      Reverse mortgages are frighteningly expensive.

      “The road to success is always under construction” --Lily Tomlin

      by CarolinNJ on Sun Aug 18, 2013 at 09:52:14 PM PDT

      [ Parent ]

  •  Patience patience patience (0+ / 0-)

    If there is anything I have learned since I started paying attention, it's that I came from a very large crowd of people that have no idea what is being done to them...
    Either I am too political for Facebook or it's- we don't talk politics at family gatherings and this is how the plutocracy wants it. They want people to be completely in the dark.
    I have one Republican friend that hates Obamacare but likes that his son can stay on his insurance until he is 26. He hates Obamacare but likes that they can not cancel him for having a pre-existing condition.

    I have changed my mind on talking to people about what the Republicans are doing to them. I present it in a "I am happy to be able to tell you that the thing you believe as true is not true..."

  •  RM's.. My Parent's experience (5+ / 0-)

    My parents had a reverse mortgage on a house in Palm Coast FL. Until the financial markets collapsed in 2008, Palm Coast (and Flagler County) was the fastest growing county and city in the US. My parents had a decent amount of stock in the Baby Bells, and some in ATT.  Once these stocks quit paying dividends, they sold it off, and put it into an investment account, which they were able to use for a while.  That got them a number of years of financial stablilty.

      They got a RM, fortunately, when their house was at the peak of it's value. They had shopped around for the best value. I don't remember their fees, but it was less than the big banks charged.   It was the type that was a LOC, and they just requested a draw from the bank when they wanted the $$. Their RM had originally had been written from a smaller local bank that got eaten by... wait for it... BofA!. Strangely, we had very few issues with BofA -from what we could tell, they kept the RM unit together from the original bank, and they had a reasonable clue.  Now, one of the interesting things about their  RM is that theirs was for no more than 50% of the FMV when they got it.... even with that, the house was massively underwater when they passed away. The housing market was THAT bad in Florida, but the house was never re-appraised to reflect the collapse in the market.  They were able to use the $$ from the RM to pay for my Mom's nursing home care (the part that Medicaid didn't), and other expenses, and then my Dad's home health care.  If the house was not underwater, I would be able to sell the house and take the profits above and beyond what the RM was for.  If not, the house goes back to the bank.  RM's by law, are non-recourse loans, so the bank CAN'T come after the heirs.  I didn't want the house, we were either going to sell it and take the profits, or give the house back to the bank. I didn't care.  

    Once both folks on the RM pass away, the heirs have a year to do something with the house.  We decided to just give the house back to the bank-by this time BofA had sold their RM portfolio to a bank that was even more incompetent than BofA, if that's to be believed.  We're at 10 months since i formally told the new bank that we were done and they could have the house.  I finally within the last 3 weeks got the Deed-in-lieu docs from that bank.  For them, the RM was a great help in their last 10 years of life.  My Dad had all his marbles until almost the end -they went into the RM with their eyes open and it did help them, and they were able to do things and help their grandkids with the $$. So I did get my inheritance, and so did my kids, just in a different way.

    Obviously, YMMV.

  •  dumber than a sack of hammers.. (0+ / 0-)

    idiot has no clue. he and his wife filled in for sean hannity radio and let slip it was from the heritage foundation studios.  his wife sounds like a player tho.

    they thought he might be able to do a radio show, but he can't.

    they're still looking for the next psychostar

    This is a list of 76 universities for Rush Limbaugh that endorse global warming denial, racism, sexism, and GOP lies by broadcasting sports on over 170 Limbaugh radio stations.

    by certainot on Sun Aug 18, 2013 at 09:30:35 PM PDT

  •  Will be? (0+ / 0-)
    This is an unsustainable path and it is leading to a country where the vast majority of citizens will have no assets. They will be functionally indentured servants. They will be nothing but a commodity, a unit of work and service.
    Already there ...

    Aside from the fact that the taxpayer has no business "guaranteeing" yet another big bank loan product - there are actually some people who do want to leave something to their "ungrateful" kids - too bad it's most often not enough to pay for the funeral expenses.

    Another facet of this is many (of loans like these are used) and estates are liquidated to pay off chronic illness expenses - though the "bank" will get theirs first - the taxpayer yet again gets to foot the bill for those defaults as well.

    People are free to take them - banks can be free to lose money on them.

    “Those who can make you believe absurdities, can make you commit atrocities.” ... Voltaire

    by RUNDOWN on Sun Aug 18, 2013 at 09:44:52 PM PDT

  •  This Fred Thompson version is the most offensive (1+ / 0-)
    Recommended by:
    a2nite

    thing I have ever heard.  Telling people that they will become "a burden" and that they "should do for themselves..."  

    Disgusting.

     http://www.youtube.com/...

    "There's been a little complication with my complication"

    by dash888 on Sun Aug 18, 2013 at 10:00:17 PM PDT

  •  Eminent domain is another risk (1+ / 0-)
    Recommended by:
    stevemb

    One possibility that I did not see mentioned above is eminent domain. If the house with a reverse mortgage is condemned under the eminent domain process, the bank will receive the proceeds and the so-called homeowner is turfed out onto the street.  It does not matter whether it is condemned for a new freeway or whatever, if a governmental body obtains ownership via eminent domain, then the bank gets the $$$ and whoever lives there loses their home. I saw an article in the news recently where this has actually happened: a family of six or seven living with the retired mom lost the roof over their head -- and the reverse mortgage payments stopped, too

    Another often overlooked problem with reverse mortgages is that the right to live in the home dies when the person whose name is on the mortgage passes away.  This means that a spouse, family member or other resident/caregiver can be and will be evicted by the bank, often with little or no notice.  

    I have come to see the reverse mortgage scam as just another way to transfer more and more wealth into the coffers of the one per cent.  The banksters simply want to own EVERYTHING -- even the humble abode of  medically fragile widows/widowers.

    As the old song goes:  "some men rob you with a six-gun and some with a fountain pen" (or, in contemporary terms, with a computer).

    •  An example (1+ / 0-)
      Recommended by:
      Dvalkure

      That played out west of Portland (OR) over the past year:

      1.  The situation:

      Twenty-five days and 18 pounds later, Patsy Burnsed, 86, is still having trouble digesting the Oregon Department of Transportation's offer for her home.It's not so much the frustration of ODOT paving over her home of 40 years for a massive traffic project, though that gets to her at times, too.

      Most urgently, it's a practical question that has caused her to lose weight and spend most nights awake: Where are she and the seven family members who live with her going to live? With a reverse mortgage on her house, ODOT's $196,000 offer, plus relocation fees, will go straight to the lenders, leaving her homeless.

      2.  The resolution:
      The Oregon Department of Transportation has purchased 86-year-old Patsy Burnsed a new house in Hillsboro, months after announcing it planned to pave over her Helvetia-area residence of 40 years. Burnsed, a widow, had used up all the equity in her home through reverse mortgages, which allowed her to live rent-free until she died or moved out. So ODOT's $196,000 offer -- plus moving expenses -- would go straight to the bank that owned the house, leaving Burnsed without the funds to find long-term housing. For Burnsed, the days and months after she received the offer last fall were consumed with worry.

      On Thursday, however, Burnsed's story reached what she called a "happy ending:" She signed the papers on a new house in Hillsboro, paid for and owned by ODOT, where she will live rent-free.

      "I can sleep at night now," she said.

      An Oregon kind of resolution, perhaps, but not one anybody -- even in Oregon -- should expect going forward.
  •  its no surprise that (0+ / 0-)

    a retired senator from the party of slime would be in the middle of the reverse mortgage scam.
    not working to gain wealth is one of the cons strong points just like not fighting for america and being experts on deferments, bigotry, and hate.

  •  Half Agree (1+ / 0-)
    Recommended by:
    Amber6541

    I half agree with this.  The no risk, middle man bank should not be involved whatsoever.  However, I do favor that no risk reverse mortgage being extended to seniors.  While it may be true that depleting their assets provides less to provide to their offspring upon death, ultimately it was the senior who originally earned that wealth and should be able to use it as they choose.  I for one think life would be more fair without any inheritance.  This would force everyone to truly earn their wealth rather than just be that spoiled brat all life.

  •  I agree with many things in this diary. (1+ / 0-)
    Recommended by:
    Justanothernyer

    But there is one glaring thing with which I must disagree.

    Social Security is not a pension or retirement plan intended to provide a "decent living" and pretending that it is, is dangerous and wrong. Social Security is essentially an insurance policy, not a pension or retirement plan. It ensures that people will not fall below a certain minimum income in old age, but it is NOT itself sufficient to ensure a decent standard of living. Pretending that that is the case is misleading and irresponsible.

    "When people show you who they really are, believe them." - Maya Angelou

    by Pennsylvanian on Mon Aug 19, 2013 at 08:41:17 AM PDT

  •  Quick question (0+ / 0-)

    Reverse mortgages totally confuse me.

    So, if I took out a reverse mortgage, partied for a year and spent all the $$ and died, do I understand that my kids would have to pay the bank 95%?  If this is true, reverse mortgages could ruin our kids lives, right?  I hope this isn't true.

    And is this true.  With a RM, the house belongs to the bank/government once the loan is taken, right?  Does the title get transferred to the bank or the government.

    It's all so mysterious and confusing, or my cognitive abilities are waning in this, the fall of my life.

    It's difficult to be happy knowing so many suffer. We must unite.

    by War on Error on Mon Aug 19, 2013 at 09:24:25 AM PDT

    •  RM questions answered, maybe.. (1+ / 0-)
      Recommended by:
      War on Error

      Ok. if you spent all the $$ avaialble in the RM, and then kicked the bucket, here's what will happen.  Most RM's are for 50-80% of the value of the house.

      1. If the house still has equity, your heirs could sell the house, pay off the mortgage, and then whatever is left is theirs. So if the RM is for 150k and the house sells for 250k, the bank gets the first 150k and your heirs get the rest.

      2. If the house is underwater (like my parent's was), your heirs give the house to the bank in a deed-in-lieu foreclosure. Now, if the heirs want the house, that's when they need to get a mortgage for 95% of the value of the loan.  
      The RM is a FHA insured, non recourse loan (that means that the bank CANT go after your heirs for the difference in what the house is worth and what the house appraises for), if they decide to give up the house.  We didn't want the house in Palm Coast -we were going to sell it or give it back to the bank no matter what happened.

      The original owners keep the deed, but the RM issuer has a note against the house.  My parents had the deed to the house, and I have it now, until the deed-in-lieu goes through.

      there is no risk to the heirs -the bank cannot go after the heirs.

      •  Whew TY (0+ / 0-)

        I also understand that the RM isn't paid out to granny in a large lump sum, but in increments.

        Is this true or can granny get a one-time large payout?

        I really appreciate your insider reporting on this as I am considering a RM to help my grand kids get through college

        It's difficult to be happy knowing so many suffer. We must unite.

        by War on Error on Tue Aug 20, 2013 at 06:21:52 AM PDT

        [ Parent ]

  •  Biggest Wealth Redistribution ever. (0+ / 0-)

    While the 1% is always whining about the estate tax, and complaining about wealth redistribution, I think the Reverse Mortgage is becoming the actual number one  shrinker of the middle class, by pushing middle class wealth accumulation up. (Trickle Up Economics).

    As the OP (or Original Diarist, anyway) alluded to, Home Ownership has long been the litmus test for Middle Class, because of the lifetime accumulation of financial security it represents. When causing the home ownership to revert to banks rather than heirs, that is a trickle up that halts the ability of the next generation not only to move up, but likely will cause downward generational mobility.

    About the only thing current Baby Boomers could count on as they neared retirement was small inheritances from "Great Generation" parents, powered by their homes.  Many Gen-Y-ers will not have even that, thanks to reverse Mortgages.

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