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Asset Preservation Advisors


State: GA

APA’s philosophy is to work closely with our clients to develop an in-depth understanding of their unique needs and objectives. We then customize a municipal bond portfolio that best meets their specific goals and needs. APA manages high quality municipal bond portfolios in four strategies: Short-Term, Intermediate-Term, High Income, and Taxable.

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Average Age Declines for Reverse Mortgage Borrowers

The average age of borrowers seeking a reverse mortgage has plummeted in the wake of the recession.

| BY Adriana Reyneri

The average age of homeowners seeking to tap into their home equity by taking out a reverse mortgage has dropped steadily in the wake of the financial crisis, according to a new study by the MetLife Mature Market Institute.  

A reverse mortgage allows homeowners age 62 and older to draw down their equity while they continue to live in their home, but requires them to stay current on homeowners’ insurance, property taxes and maintenance. The products, also known as Home Equity Conversion Mortgages, are helping an increasing number of older baby boomers manage urgent financial needs, according to the MetLife study, which was produced in conjunction with the National Council on Aging. Forty-six percent of homeowners considering a reverse mortgage are younger than 70, the study reports, while the share of prospective 62-to-64 year olds has gone up 15 percent since 1999.

At the same time the average age of homeowners who have taken out reverse mortgage has fallen steadily from 76 in 2000 to just below 73 today, according to data from the U.S. Department of Housing and Urban Development.

“Consumer attitudes about reverse mortgages are changing because the recession has eroded confidence about retirement security and Americans will rely more and more on these measures,” said Sandra Timmermann, director of the MetLife Mature Market Institute, which operates under the same umbrella as MetLife Bank, a provider of reverse mortgages.

The lower average age for reverse mortgage borrowers raises concerns for lenders, who face increasing risks due to falling home prices and the ever shakier financial ground of boomers and retirees. About 13,000 reverse mortgages are facing “technical default” due to a homeowner’s inability to keep up with property taxes and insurance, according to Reverse Mortgage Educator, and the trend is on the rise.

The risks have prompted two of the nation’s largest banks, Wells Fargo and Bank of America, to leave the reverse mortgage business last year. The banks, which accounted for roughly 43 percent of the industry, were joined by the fifth-largest reverse mortgage lender, Financial Freedom, according to the website.

Baraba Stucki, vice president for home equity initiatives for the National Council on Aging, a nonprofit advocacy group, said of the declining average age of reverse mortgage borrowers, “While the economic downturn may be a major reason borrowers have begun to use this financial option for debt management, in the future it is likely that tapping home equity will be viewed as part of the entire retirement planning process.”