LOL, thats because the banks are losing their tails on the reverse mortgages they wrote before the real estate melt down. For those who dont know, a reverse mortgage is a mortgage that pays out the equity locked up inside a home to the home owner while the home owner is still alive. The home owner doesnt have to make any mortgage payments. Now these things arent for everybody and I have only recommended them a couple of times for specialized circumstances. Where the banks are losing is that the loan is based on the value of the house when the loan is taken out. When the home owner dies the bank sells the house to hopefully recover all they paid out plus make a profit. What they didnt count on was real estate prices falling 25%-40% across the country. So you have banks contractually obligated to pay out more the the homes are currently worth. Oops! :)
Posted on: Mon, 17 Mar 2014 14:02:14 +0000
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