The SCAN Foundation

With a reverse mortgage, an older person taps the value of the equity his or her home, often using the money to pay for long-term services and supports. After the senior dies, the house is often sold to repay the money furnished by the bank or another lender. There is concern that the fees paid by the homeowner are sometimes excessive, and the government could be forced to take responsibility for the mortgage if the transaction goes sour. “So it’s a double-edged problem,” said Sen. Claire McCaskill (D-MO,) who presided at a June 29, 2009 hearing in University City, MO, by the Senate Special Aging Committee.

“First, are the seniors getting the information they need to make good decisions as it relates to reverse mortgages?” she said. “Have we done everything possible to give them protection and, most importantly, make sure there is no fraud? Second, are we looking at a price tag for taxpayers that is higher than the benefit that these particular financial instruments offer, and should we re-evaluate whether or not the government should be the one taking the risk on these loans?” The transcript of the hearing, “Reverse Mortgages: Leaving Seniors and Taxpayers on the Hook.”