You own your house with your spouse. You're "encouraged" to reverse-mortgage the place with only the older spouse's name on the note, which has the effect of increasing the monthly payments to you (because he or she is expected to live for a fewer number of years.) Then that spouse dies and the younger one, who has plenty of time left to live, has to pay off the entire balance or lose the house.
This used to be illegal but HUD changed the rules in 2008. Previously the surviving spouse could stay in the home until they died, irrespective of the note. Not any more.
Of course these "reverse mortgages" come with ridiculous fees, often as much as 6 or 7% of the "reversed" balance. This can amount to $20,000 in fees on a $300,000 property.
To put this in perspective the usual "full-in" basket of fees on a normal mortgage is a third of that - and sometimes less.
These products could have been a useful tool for cash management for senior citizens. Unfortunately they've been turned into just another asset-stripping scheme for the banks and as is the usual in these schemes the government is actively conspiring with the banks to rip everyone else off.
People wonder why I believe our nation would be well-served were God to decide to send a Tsunami into Washington DC and Wall Street, wiping both clear off the map. I will simply observe that until and unless the people rise and demand that this sort of abusive crap stop and everyone involved in it go straight to prison it not only won't stop, it will get worse. A dishonest entity will not quit stealing because you ask nicely - you have to force them to stop by removing their ability to do it again.
All reverse mortgages are government-guaranteed and supervised. There is no such thing as a fully-private reverse-mortgage. For this reason it is perfectly appropriate to consider these acts as nothing less than banks financially raping senior citizens with the full advice, consent and assistance of the Federal Government.
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