Reverse mortgages burst on the scene a decade or more ago and provided what appears to be an attractive financial cushion for a person’s golden years.
In most cases, it works.
But, in some cases, seniors have failed to dissect the contract or rushed into a decision without adequately considering the long-term impact and costs still related to owning a home.
Many seniors failed to compute the cost of insurance and taxes — both of which are subject to increases — when figuring their income. Some, according to Consumer Financial Protection Bureau, often take out reverse mortgages too early in life or, in other cases, just do not understand them. Also, too many reverse mortgage clients take their money in a lump sum, leaving them little or no income years down the road.
And, in some cases, they may have gotten bad advice or been pressured into a reverse mortgage that may not have been the best alternative. AARP is involved in lawsuits now to aid clients who feel they were middled.
Whatever the reason, too many elderly homeowners are finding themselves unable to pay and end up facing foreclosure.
A new program, administered through the Florida Department of Elder Affairs, has been formed to help those whose needs are greatest.
Called the $1 billion Hardest Hit prevention program, it offers up to $25,000 in assistance to seniors who are in danger of losing their homes because of expenses for taxes, insurance or even community association fees. The federal program was initiated in 2010 and gave 18 states and the District of Columbia $7.6 billion. Florida received $1.06 billion.
In a Cox Newspapers story, Charles Corely, secretary of the Florida Department of Elder Affairs, said the “goal is to keep people in their homes as long as possible ... ”
According to that same story, the Consumer Financial Protection Bureau found about 57,600 reverse mortgage borrowers, or 9.4 percent of the nationwide total, were facing foreclosure. That includes about 10,000 in Florida.
The state estimates the program will aid about 2,500 Floridians who seek help.
Residents can apply for the $25,000 in reverse mortgage relief by calling 1-800-601-3534.
However, we do not believe more government and taxpayer-funded aid is the answer. But, helping the elderly stay in their homes is a good thing.
We would like to see more regulation of reverse mortgages to avoid problems down the road for people who are looking for an economic boost in their golden years. The language needs to be simpler and the pluses and minuses clearly spelled out for clients.
Thousands still move to Florida each year to enjoy our sunshine and perks, like no state income tax. Many are retirees and most of the others are looking to stay and retire here. While they are responsible for their own financial decisions, there is a clear need to make those decisions easier to navigate.