"Declining home values have put a serious squeeze on one of the mortgage market's most popular and fastest-growing financing concepts: the Federal Housing Administration's reverse mortgage program for seniors 62 and older. In a letter to reverse mortgage lenders Sept. 23, FHA Commissioner David Stevens said his agency must reduce the maximum amounts seniors can receive on reverse mortgages because of a $798 million estimated deficit in the program in the coming fiscal year."
I don't know about you but I've always felt that these financial vehicles were a bad deal for both parties.
- The banks made them thinking they could rob seniors of future equity growth in the house. What a shock when they found out that real estate doesn't always go up in value.
- The seniors made them thinking it was free money, but never considered; the Medicaid implications of the Deficit Reduction Act of 2005, other tax benefits associated with having a mortgage, and complicated inheritance issues.
The last 15+ years of tinkering with housing by the Federal Govt. has turned out to be a disaster.
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