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Kotlikoff: A reverse mortgage sounds great, but there are risks

Larry Kotlikoff

By Laurence Kotlikoff

Originally posted at The Seattle Times, June 2017

Are you 62 or over, house poor and barely making ends meet? If so, the Department of Housing and Urban Development (HUD) claims to have the answer. It’s called a Home Equity Conversion Mortgage, or HECM. HUD regulates HECMs, or at least it says it does.

An HECM sounds like a great financial product. It lets people 62 and older, many with little if any financial assets, tap into their home equity to get either immediate or monthly cash payments to help pay bills. In exchange, the household (let’s call them the Smiths) signs an IOU (the HECM) with the financial company (let’s call it ABC Corp.) issuing the HECM. MORE

John C. Goodman is President of the Goodman Institute and Senior Fellow at The Independent Institute. His books include the soon-to-be-published updated edition of Priceless: Curing the Healthcare Crisis, the widely acclaimed A Better Choice: Healthcare Solutions for America, and New Way to Care: Social Protections that Put Families First. The Wall Street Journal and National Journal, among other media, have called him the “Father of Health Savings Accounts.”

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