Reverse mortgages good option for some seniors

That Ralph and Plum Smith bought a house last month in Brookings, Ore., is not terribly remarkable, at least not until you learn that he's 84 and she's 77. But what is even more noteworthy is that the couple didn't pay cash for their new $240,000 home, yet they will have no mortgage payments.

The Smiths are among the first seniors in the country to close on a Home Equity Conversion Mortgage (HECM) for purchase, a form of federally insured reverse mortgage authorized by Congress in the Housing and Economic Recovery Act of 2008. The law took effect Jan. 1. The program is aimed largely at people 62 years or older who want to move down the housing ladder. The idea is to allow them to sell their current residence and use a reverse mortgage to buy a new one, all in a single transaction.

The Smiths don't fit that profile. But then Monte Howard, director of Affinity Marketing for Generation Mortgage, the Smiths' reverse-mortgage lender, believes it will be the nation's burgeoning legion of seniors, not the lending community, "who are going to teach us how this product really works."

That Ralph and Plum Smith bought a house last month in Brookings, Ore., is not terribly remarkable, at least not until you learn that he's 84 and she's 77. But what is even more noteworthy is that the couple didn't pay cash for their new $240,000 home, yet they will have no mortgage payments.

The Smiths are among the first seniors in the country to close on a Home Equity Conversion Mortgage (HECM) for purchase, a form of federally insured reverse mortgage authorized by Congress in the Housing and Economic Recovery Act of 2008. The law took effect Jan. 1. The program is aimed largely at people 62 years or older who want to move down the housing ladder. The idea is to allow them to sell their current residence and use a reverse mortgage to buy a new one, all in a single transaction.

The Smiths don't fit that profile. But then Monte Howard, director of Affinity Marketing for Generation Mortgage, the Smiths' reverse-mortgage lender, believes it will be the nation's burgeoning legion of seniors, not the lending community, "who are going to teach us how this product really works."

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