Can you tell me about reverse mortgages? My wife and I are both in our 70’s and are interested in learning more about this option.

Homebody Bob

Dear Bob,
Over the years reverse mortgages have been considered loans of last resorts, only for financially desperate seniors. Not anymore! The reverse mortgage industry is booming helping retirees from all walks of life use their homes to help fund their retirement.

The Basics

A reverse mortgage is a unique loan that lets older homeowners convert part of the equity in their home into tax-free income that doesn’t have to be paid back as long as they live there. But who’s eligible? How much can be borrowed? What does it cost? And is this right for you? Here are the key points on how a reverse mortgage works and where you can find help:

• Eligibility: To be eligible you must be at least 62 years old, own your own home and currently be living there. There is no income qualification. Even if you have an existing mortgage, you’re still eligible, but you must be able to get enough from the reverse mortgage to pay it off.

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As reverse mortgages continue to grow in popularity so have the various myths and misconceptions surrounding them, making it more important than ever for borrowers to obtain clear and unbiased information about reverse mortgages. To help dispel some of these reserve mortgage misconceptions, Golden Gateway Financial, the Web’s most comprehensive financial resource for seniors and retirees, today shared the truth behind ten of the most common reverse mortgage myths.

“Getting a reverse mortgage is an important financial decision that involves both the head and the heart,” said Eric Bachman, founder and CEO of Golden Gateway Financial. “It’s important to share the truth behind reverse mortgage myths so that seniors and their families can accurately weigh both factors. We are committed to ensuring that families have the right information so that they can make well-informed decisions about reverse mortgages and retirement.”

Myth: The Bank Owns Your Home in a Reverse Mortgage

Reality: This is the most commonly held reverse mortgage misconception. The bank never owns your home. The reverse mortgage borrower retains title as long as they live in the home, just as they would with a traditional mortgage.

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The allowance for prepayment penalties was described by supporters of the legislation as a compromise measure crafted in the wake of opposition by a national industry lobby group which a year ago scuttled efforts to approve similar legislation.

“Nobody wanted the prepayment penalties,” the state Department of Business Regulation’s director, A. Michael Marques, said yesterday, “[but] if the bill didn’t pass this year, the only one who benefits are the people who are trying to take advantage of the elderly.”

Reverse mortgages allow cash-strapped homeowners who are 62 or older and have paid off their houses to borrow against the equity. The loans do not come due until the borrower sells the house or dies.

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While small portions of some budget bills were vetoed by the governor, only two were vetoed in their entirety.

They included a law that would have given Iowa’s public employees the widest-reaching union rights in the nation. The other law would have allowed minors to emancipate themselves from parents.

Culver also vetoed a nearly $12,600 raise for himself as well as raises for other top elected officials set by lawmakers, saying that “it is wrong to say to the people of Iowa that you have to tighten your belts, but elected officials don’t.”

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I would like to state that we are very unhappy with the reverse mortgage that my parents took out from WSFS Bank in 1990. It is a shared appreciation loan that gets 82% of the value of the home. My mother is about to go into a home and the house value is around 2,000,000. My mother will not have the income from the reverse mortgage and needs the money for the nursing home. Not only is WSFS getting a ridiculous interest rate of 11.75% they are going to walk away with another $300,000 - $700,000. This is criminal and immoral to allow these kinds of contracts. Fannie May no longer honors these clauses in their contracts for that very reason. However, when I spoke with Bob Bell at WSFS about the contract he not only was rude but did not see anything wrong with this and no reason he should renegotiate the contract that my parents signed. My father not only was not in his right mind…he died of a brain tumor! It would appear to me to be predatory lending. What does your organization do to protect seniors against lenders with only their profits and self interest at heart and why do you support banks that rip off consumers equity in addition to the huge interest rates they charge? Do you have any recommendations for recourse? Thank you for your response.

Christine Carlton

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The Nipomo couple have found themselves in the same situation as millions of other Americans: Their homes are worth less than they owe, their mortgage terms are crushing their finances and the specter of foreclosure is looming.

Their struggle may be emblematic of the times. Just across their street, in fact, a home has sat vacant for more than a year, the yard untended, the windows coated with dust.

“Our neighbor … just walked away,” said Don. “He said, ‘I’m not paying.’ He just moved away.”

The Spendloves find their situation embarrassing, but they’re willing to talk about it in hopes they can help others avoid the pitfalls that led them to a crisis they never expected to face.

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Lt. Gov. Peter Kinder signed a bill into law Monday in Springfield creating the Missouri Commission on Autism Spectrum Disorders and an Office of Autism Services in the Department of Mental Health.

But advocates say it’s window dressing for the larger issue Republican leaders have declined to address: requiring health insurance companies to cover behavioral, speech and physical therapies for autism.

Most insurance companies classify autism as a pre-existing condition, according to parents of children who have the neurological disorder and the Burrell Autism Center in Springfield.

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He bought a new home in 2007, when he had a good job and the economy was fine. But a year later a slew of events - a new baby, a reduction in his weekly hours at Bright Wood Corp., from 40 to 28, and a high-interest loan - made mortgage payments impossible to pay.

It’s a story that’s becoming increasingly familiar and like many, Montes thought he had no choice but to wait for the bank to foreclose on his property.

In the fourth quarter last year, 4,680 homes in Oregon were in foreclosure proceedings - an increase of 26 percent from the third quarter, according to the state Department of Consumer and Business Services.

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As Australia’s reverse mortgage market skyrockets, retirees are urged to seek informed advice before making decisions over their options, according to Sydney Wide Investments Mortgage Manager (SWIMM) managing director Tim Stoyles.

“At the moment, the reverse mortgage market is around $1 billion-$1.5 billion, but more growth is expected, with projections of up to $15 billion in the next five years,” Stoyles said.

“The figures we’ve seen show it is growing at 50 per cent per annum compared with previous years.”

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Ms Dyson told Parliament’s social services select committee that home equity releases, also known as reverse mortgages, were a good way for elderly people to get money.

Reverse mortgages are mostly taken up by pensioners who give title to all, or part, of their home in exchange for instalment payments of cash. The money is recovered from the pensioner’s estate when they die.

“I am not implying any of the home equity schemes are anything but reputable but I do believe we have an area of vulnerability, so we may well have some shonky behaviour in the future,” Ms Dyson said.

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