Tagged by Bloomberg as America’s most hated home loan, reverse mortgage, allowing homeowners over age 62 to convert some of their home equities into cash, is back on business.
Just recently, Chris Mayer, a professor from Columbia Business School and a CEO of a reverse mortgages company, hosted a lecture debunking some of the common misconceptions associated with the controversial home loan. Mayer, along with a few industry officials and academics, says that reverse mortgages deserve “a second look.” This sentiment was, later, backed by industry websites by citing a few cases of key successes of people brought by the mortgage.
Critics, however, are quick to respond to these pronouncements. Confirming that the loan could, in fact, be beneficial to consumers, some still maintained that the loan is still way too expensive. Dave Stevens, in particular, maintained that such type of lending allows greed to prey on seniors who should be protected by government programs. This was echoed by a few other personalities such as Fred Thompson, a U.S. Senator, and Michael Douglas, an actor.
Meanwhile, in their effort to market the program amid criticisms, several companies are beginning to employ different techniques that could appeal to consumers. Just this month, Finance America Reverse, in particular, has dropped the cost of two of their reverse mortgage products, the HomeSafe Standard and the HomeSafe Flex. As reported by HouseWiring, this effort of FAR to drop the overall cost by $7,000 to $8,000, is directed towards the aim of opposing the general criticism that home mortgages are way too expensive, providing clients with more efficient loan options.
With the previous shortfall of home mortgages and the apparent effort of the government to compensate on the loss and prevent the same event from happening, the coming of the most hated lending program back into the field continues to spark debate from different sectors.