NY Times says allure grows for Reverse Mortgages

By ELSA BRENNER
NY Times, Published: May 1, 2009

RETIREES everywhere whose savings have shriveled in the credit crisis are turning to reverse mortgages to meet their expenses — and in places like Westchester County, where high property taxes also weigh heavily on their shoulders, such loans have become more popular.

For owners 62 or older faced with bad timing, and perhaps hoping for eventual improvement in their portfolios, it can be sensible to stay put, making use of a reverse mortgage to borrow against the equity in the home tax-free, with no requirement to pay the money back as long as the borrower lives in the home.

Describing many of his clients as “house rich and cash poor,” Mr. Krooks explained that this situation affords Westchester retirees “a much-needed, day-to-day income stream to meet their expenses.”

According to the federal government, the volume of reverse mortgages increased 24 percent in March compared with February , setting a national monthly record of 11,261 reverse-mortgage loans. And as the market for them booms, the profile of those using them is expanding, Mr. Lamoreaux said. “It used to be just the 75-year-old widow,” he added, “but that’s not so anymore.”

Nowadays, the loans are becoming more popular both with recent retirees and the very elderly — though the motivations are very different.

Mr. Lamoreaux cited the example of clients of his in their 60’s “who had lived large when they were younger,” owned a vacation home and had taken out two or more mortgages on their primary residence to finance their children’s education. As a result, they had few resources left to carry them through retirement, especially with their investments depleted.

Another couple he counseled had been looking forward to retirement in the next few years and had planned to sell their home in northern Westchester and move, permanently, to their vacation home in North Carolina. Then, last month, the husband was laid off by his company as part of a cost-cutting measure.

The couple faces a new reality: the value of their home has plummeted from its peak two years ago, and the monthly payments on their seven-year interest-only mortgage are about to go up — just as their income is evaporating. They are candidates for a reverse mortgage to help refinance their debt and buy them time to regroup and consider their options.

Another couple, in their late 80s, recently told him their reason for needing a reverse mortgage: “We’re not supposed to be alive to need money to live now, but here we are.”

to learn more, call me Bill Hendrick at 303-440-6900 or email bhendrick@yourloanteam.com