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My in-laws fell victim to this. When they moved they sat us down and started to talk about this "407-B" (not the real name, but I don't remember what it was) an

My in-laws fell victim to this. When they moved they sat us down and started to talk about this "407-B" (not the real name, but I don't remember what it was) and how it's not a reverse mortgage. Then they proceeded to describe it as exactly a reverse mortgage. Meanwhile I was tap-tap-tapping on my phone. I called them out and said it was a reverse mortgage according this page titled "Everything you need to know about 407-B reverse mortgages". They asked what fly-by-night website it was and when I said "irs.gov" they grumbled and moved on. To this day they refuse to admit that it's a reverse mortgage. > If they ever went through with the offers they get in the mail, they'd be homeless, without insurance, cashless and asset-less within a year. Not that quickly, but yeah, they're on that road. They're trapped in that home until they die. They'll be needing hospice care soon, and they won't be able to get it. Nothing we can do to move them off of it now because it's basically irreversible.

ryandrake 4y ago
Everyone needs to have that awkward "don't trust any unsolicited offers" conversation with their aging parents. They may seem sharp today, but people's mental faculties decline. My folks fell for one or two, and they're a lot more on the alert now. I'm glad they listened and understand not to trust any unknown callers or mail. Feel terrible for some other people I know who can't get through to their parents, who are convinced that "Rajesh" from the IRS needs to be paid $20K through Amazon gift cards. This generation who told us all to not believe what you read online... now trusts everything they see on Facebook, everything they get in the mail, and every phone call they get.
- shaftway 4y ago
  Too true. We had to have the talk with them after they almost fell for the IRS gift card scam, basically verbatim
jimmydddd 4y ago
Hope it works out for them. Not sure though why you're so against reverse mortgages? It seems like it's just one of several options for folks to pull equity out of their home. Especially if a high priority is to stay in their home. I'm sure there are scams, but, for example, in NJ, before signing up, you meet with a government specialist who reviews the terms and the company to confirm that it's legit.
- shaftway 4y ago
  I'm not fundamentally against them, and I don't think they're scams, but it was a poor choice in their case. I also don't think this one wasn't legit, but I think that an objective bystander would not have been able to say it was a good decision. - They had a $250,000 house that was completely paid off. - They used the sale of that house as their down payment with a reverse mortgage to buy a $400,000 house, so they effectively didn't pull any equity out. - It was very clear that they would need nursing home care in 10-15 years due to several health issues in both their backgrounds. - They had no investments, no savings, no assets, and they were planning on living almost completely off of social security. - It was clear that they had no basic understanding of what a reverse mortgage even was. At the time I predicted that they'd need to move to a nursing home or an assisted living facility in ~15 years. They wouldn't have any way to pay for that, and selling the house wouldn't be an option because they'd be completely underwater on it. They'd eventually try to get a nurse to stop by regularly, but when they get to that point it'll be paid by us because they won't be able to afford that and food. My predictions were off slightly, but not for the better. The house is already underwater due to a variety of factors. Mother in law's cancer is aggressive enough that she won't live long enough to need nursing care. Father in law is right on schedule. We're already paying for food occasionally because we found out that when faced with not being able to afford both food and medicine they were sending cash to one of their kids. I think the ideal case for a reverse mortgage is a healthy elderly couple that either has no children to leave things to, children who are self-sufficient, or who have sufficient retirement income but they want a bit of splurge. > My in-laws fell victim to this The "this" was a reverse mortgage that they had been coached to call "not a reverse mortgage"
- heavyset_go 4y ago
  It's because they're purposely obfuscating what the mortgages are in order to deceive. There's nothing wrong with them per se, what's wrong is taking advantage of people and deceiving them into making poor choices that can have significant consequences.

ryandrake 4y ago

Everyone needs to have that awkward "don't trust any unsolicited offers" conversation with their aging parents. They may seem sharp today, but people's mental faculties decline. My folks fell for one or two, and they're a lot more on the alert now. I'm glad they listened and understand not to trust any unknown callers or mail. Feel terrible for some other people I know who can't get through to their parents, who are convinced that "Rajesh" from the IRS needs to be paid $20K through Amazon gift cards. This generation who told us all to not believe what you read online... now trusts everything they see on Facebook, everything they get in the mail, and every phone call they get.

shaftway 4y ago
Too true. We had to have the talk with them after they almost fell for the IRS gift card scam, basically verbatim

jimmydddd 4y ago

Hope it works out for them. Not sure though why you're so against reverse mortgages? It seems like it's just one of several options for folks to pull equity out of their home. Especially if a high priority is to stay in their home. I'm sure there are scams, but, for example, in NJ, before signing up, you meet with a government specialist who reviews the terms and the company to confirm that it's legit.

shaftway 4y ago
I'm not fundamentally against them, and I don't think they're scams, but it was a poor choice in their case. I also don't think this one wasn't legit, but I think that an objective bystander would not have been able to say it was a good decision. - They had a $250,000 house that was completely paid off. - They used the sale of that house as their down payment with a reverse mortgage to buy a $400,000 house, so they effectively didn't pull any equity out. - It was very clear that they would need nursing home care in 10-15 years due to several health issues in both their backgrounds. - They had no investments, no savings, no assets, and they were planning on living almost completely off of social security. - It was clear that they had no basic understanding of what a reverse mortgage even was. At the time I predicted that they'd need to move to a nursing home or an assisted living facility in ~15 years. They wouldn't have any way to pay for that, and selling the house wouldn't be an option because they'd be completely underwater on it. They'd eventually try to get a nurse to stop by regularly, but when they get to that point it'll be paid by us because they won't be able to afford that and food. My predictions were off slightly, but not for the better. The house is already underwater due to a variety of factors. Mother in law's cancer is aggressive enough that she won't live long enough to need nursing care. Father in law is right on schedule. We're already paying for food occasionally because we found out that when faced with not being able to afford both food and medicine they were sending cash to one of their kids. I think the ideal case for a reverse mortgage is a healthy elderly couple that either has no children to leave things to, children who are self-sufficient, or who have sufficient retirement income but they want a bit of splurge. > My in-laws fell victim to this The "this" was a reverse mortgage that they had been coached to call "not a reverse mortgage"
heavyset_go 4y ago
It's because they're purposely obfuscating what the mortgages are in order to deceive. There's nothing wrong with them per se, what's wrong is taking advantage of people and deceiving them into making poor choices that can have significant consequences.