HECM Saver > Low-Cost HUD Reverse Mortgage

HECM Saver > Low-Cost HUD Reverse Mortgage

Somebody really screwed this up. While the Gov still offers the Standard Home Equity Conversion Mortgage Purchase, it seems that isn't all. Now they are offering one that gives you less money and you are suppose to be happy to do it. go figure.

I don't think that the government nor the mortgage industry truly understand who is turning to the Reverse nor why. First the mortgage industry hasn't effectively brought the Realtor on board for the marketing of the golden fleece (pardon the metaphor) of the FHA product-HECM Purchase. Second, the average age of RM users has dropped to 62 and finally most RM users are taking the credit line (66%).

These three facts are not disputed and they have significant meaning.

No Realtors

In 2009 there were 105,000 reverse mortgages of which 1,205 were Purchases. So what? Well that means the 1,205 Baby Boomers bought retirement homes for about 48 cents on the dollar. They created a hedge agains the depreciating home value and alleviated the losses from the sale of their home in that purchase. Pretty brilliant financial move I'd say.

Boomer Realization.

In June the Bank of America announced that Reverse Mortgage users' demographic had fallen from an average of 77 year olds down to 62 year olds. Considering the fact that there are 8,000 people turning 62 every day in the U.S. that would normally bode well for their industry. The facts speak otherwise however since RMs are basically falling down through the basement floor (-62%).

Credit Line option.

The myth of the Reverse Mortgage is that it is for desperate people, seniors with fixed income but some remaining credit. If that's the case then why is it that 66% of all Reverse Mortgages are "Line of Credit" buyers. Could it be that taking a line of credit and NOT TOUCHING THE PRINCIPAL might be creating a natural hedge against inflation? You can take that to the bank. Consider that a Boomer who takes a $350,000 Reverse Mortgage Line of Credit today at the age of 62 and leaves it alone will be looking at a $600,000 plus credit line at the age of 72.

The HECM Saver is the governments answer to nothing. Boomers need to treat the Reverse Mortgage like they are looking at Social Security--get it now before some idiot in congress tries to take the money for a bridge remodel for his buddies back in hornswagle county...