of your home's equity now and never make another house payment while you live in the home. Loans are set based on value of home and age of borrower. The homeowners get their equity to spend today and don't make any more mortgage payments as long as one of the homeowners still lives in the house. At the time the final homeowner ceases living in the home it is sold and the proceeds used to clear the loan. This concept is marketed with tables showing an increase in home values which seems to offset the rising value of the loan. But there is a catch here. It isn't the homeowner who will make good the loan if the value of their home diminishes, it is the taxpayer through the FHA loan insurance attatched to Reverse Mortgates.
* If borrower lives longer than expected, and loan costs exceed the value of the house, the Federal Housing Administration covers any lender losses, not the estate or the heirs.
Source: AARP, National Reverse Mortgage Lenders Association, mortgage industry
Am I overly suspicious, or does this look like a safe way to make loans in a falling real estate market at the taxpayer expence. Neither the lender or the borrower bear any liability if the house looses value as the taxpayer will bail out both.