10 CONSUMER FINANCIAL PROTECTION BUREAU
While advertising is designed to portray products in an attractive light, getting a reverse
mortgage at age 62 can be very risky since there is an increased likelihood that younger
borrowers, compared to older borrowers, will outlive their loan funds. Americans live longer
every year,
11
and millions of Americans approaching retirement have little or no retirement
savings.
12
For those with a retirement account, the median balance is only $103,200.
13
The
Employee Benefit Research Institute (EBRI) finds that 44 percent of baby boomers will fall short
of adequate retirement income for basic expenses and uninsured health care costs.
14
While older
Americans are likely to have less income available to cover day-to-day expenses, health and
long-term care expenses often increase dramatically.
15
Thus, waiting to access home equity can
help preserve retirement resources.
16
Yet the CFPB found in its report to Congress that reverse
mortgage borrowers are increasingly younger, i.e., borrowers age 62-69 more than doubled
between 1990 and 2011.
17
Tapping home equity early in retirement can jeopardize financial
security later in life if borrowers outlive their resources or face unexpected expenses.
11
Jiaquan Xu, et. al, NCHC Data Brief, No. 168, Mortality in the United States, 2012 (Oct 2014) at
http://www.cdc.gov/nchs/data/databriefs/db168.pdf.
12
Fed. Reserve Bd, 2010 Survey of Consumer Finances: Percent of families with retirement accounts, p.441,
http://www.federalreserve.gov/econresdata/scf/files/BulletinCharts.pdf.
13
Id. at p.442. In addition, an increasing number of Americans are retiring without pensions. See EBRI, Fast Facts,
#225, Pension Plan Participation (March 28, 2013), http://www.ebri.org/pdf/FF.225.DB-DC.28Mar13.pdf. See also,
WISER & Society of Actuaries, Impact of Retirement Risk on Women, 2013 Risks and Process ofRetirement Survey
Report (2013) (finding that women have an increased likelihood of outliving assets),
https://www.wiserwomen.org/images/imagefiles/2014-risks-process.pdf.
14
See EBRI, Notes, Vol. 33, No.5 (May 2012), http://www.ebri.org/pdf/notespdf/EBRI_Notes_05_May-12.RSPM-
ER.Cvg1.pdf.
15
Health Serv Res. 2004 Jun; 39(3): 627–642, The Lifetime Distribution of Health Care Costs,
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/.
16
In an effort to decrease HECM defaults caused by borrowers’ inability to pay real estate taxes and insurance,
effective March 2, 2015, FHA requires lenders to conduct financial assessments of prospective HECM borrowers
prior to approving the loan. HUD Mortgagee Letters 2013-27 (September 3, 2013) and 2014-22 (Nov. 10, 2014),
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hecm/hecmml.
17
CFPB, Reverse Mortgages, Report to Congress (June 28, 2012) supra at 48-49. available at
http://files.consumerfinance.gov/a/assets/documents/201206_cfpb_Reverse_Mortgage_Report.pdf.