Federal Housing Administration

Reverse mortgages have improved, but buyer still must beware

My views on reverse mortgages have become somewhat more favorable.

When I started writing about them five years ago, I believed, along with many financial advisers, that reverse mortgages should only be used as a last resort.

Reverse mortgages are for older homeowners (62 years or older), allowing them to access their home equity in a lump sum, regular payments or a line of credit. They make no monthly mortgage payments; their loan is repaid when they die, sell or move out of their home.

The problem was that too many people took the loans on without understanding the risks. Many believed there was no chance they would ever face foreclosure. However, those who could not...