Journal of Business & Economic Policy

Choosing a Reverse Mortgage: Mirage, Utopia, or Atlantis
William Saunders, J.D; Carlton Perkins, J.D., CPA; Dr. Michara Delaney-Fields

Abstract
Although a reverse mortgage is not the only financial product where older homeowners can tap into the equity in their homes, it is becoming a popular alternative. For years, the availability of the Home Equity Conversion Mortgage (HECM), spurred on by aggressive marketing, has been the leader in the reverse mortgage market. Thousands of asset-backed reverse mortgages have been approved which has resulted in billions of dollars of equity being transferred from homeowners to lenders. At first glance, the concept of reverse mortgages seems simple. However, the process is complicated, has a myriad of accompanying regulations and potential pitfalls. This study will examine the benefits, potential harmful effects and overall feasibility of the reverse mortgage as it applies as a financial tool for a significant segment of homeowners.

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