particular HUD). From the standpoint of protecting innocent borrowers from ruthless lenders, HECMs are about as “safe” a mortgage product as can be imagined. Yet there are true horror stories from the pre-HUD reverse mortgage era about seniors being forced to sell their homes or lose them to foreclosure. Unfortunately, these stories have now become urban legends and still taint the phrase “reverse mortgage”. A related issue is the ongoing problem of elderly homeowners being contacted by “home repair” companies, annuity salespersons, and other pitch-men promoting the reverse mortgage as the ideal way to pay for their valuable product or service. The tacky nature of this type of solicitation further increase doubts and fears about whether reverse mortgages are truly legitimate.

• Fear of Financial Complexity - There is no question that reverse mortgages are complex financial tools. Moreover, by their very nature they run counter to many of the golden financial management rules that senior homeowners have strived to abide by over their adult lives - i.e. “reduce debt”, “avoid high transaction fees”, “grow your home equity”, etc. Largely because of the complexity, HUD requires all HECM applicants to participate in counseling sessions to ensure they have full understanding of the reverse mortgage process and the other alternatives that may be available. Yet, while necessary and well-intended, the counseling requirement itself may scare-off some potential applicants who feel that they just won’t be capable of digesting all the new information presented.

• Fear of Not Leaving an Inheritance - For many seniors, the desire to leave an inheritance to children or grandchildren is quite strong - even to the point of accepting a more modest than necessary lifestyle to ensure that an estate survives them. Seniors, who have this goal and whose largest asset is their homestead, clearly will perceive that a reverse mortgage runs directly counter to their strong bequest motive.
• Fear of Sacrificing Future Flexibility - To be a sensible financial decision, a reverse mortgage should equate to a conscious decision by the homeowner to stay put for the long term - minimally 5-7 years and, ideally, for the rest of the homeowners’ lives. Obviously, this commitment is especially difficult for the elderly homeowner. Death, long-term illness or incapacity and similar issues weigh heavily on the minds of many seniors and make long-term housing commitments especially stressful.