Spring 2011, Vol. 36, No. 1

Abstract: Reverse mortgages are becoming popular in America, and although they are only a small niche in the multi-trillion dollar banking industry, they have begun to attract the interest of banks, mortgage brokers, insurance companies, and Wall Street investors who are looking for new profit centers in the wake of the subprime mortgage meltdown. Here, the authors discuss why seniors who might be considering these loans, and U.S. taxpayers who have suffered from the subprime meltdown, should carefully evaluate how the reverse mortgage market is developing. Reverse mortgages are complex financial transactions that have considerable closing costs, but when used correctly and under the right circumstances, have the potential to greatly enhance the lives of the senior borrowers who obtain them. This article introduces the reader to the reverse mortgage market, providing information about its growth, characteristics of these loans and issues of concern.