RE:RE:EXE short position at 2,814,753 as of Jan 15th 2019My average is over $8, so I'm underwater...but I'm not looking to sell, in fact I'm hoping to be adding based on my 3-10 time horizon when I think the market will be all over stocks like EXE.
A little more on the hate I have for so called 'Reverse Mortgages'....I think advertising them as such should be illegal, because there's nothing reverse about them....they're worse than a mortgage. A mortgage is simply a loan taking out against a property, and that's what these are.
I have counselled people to avoid them at all costs....but I understand the reasons why they might seem attractive. A couple in their 70s owns their home free and clear. We'll say the house would fetch $750K on the market right now. But the couple doesn't want to mortgage the house for needed cash, it took them 10, 15, 20, 25...maybe more years to pay it off, and having a mortgage payment again would seem like a failure. But their kids need money, or they want to travel....or whatever, there's are tons of reasons people need money.
So along comes some outfit talking about a Reverse Mortgage, with no payments....unlock the value of your home, and never make a payment until you sell your home. Sounds wonderful, but the devil is in the details.
These loans might be payment free, but they are not without a big cost. The interest rate is likely to be more than double current rates around 3%. And each month the interest payments are added to the principle. The loan just keeps growing and growing...interest on top of interest and principle.
My fear for seniors is that a couple in their 70s who takes one of these loans out....they reach 90 and need to move into an assisted living facility. They don't have much in savings but figure, "well...we still own our home". Not so fast....its conceivable that at age 90 that the loan could have balloooned to such a level that there would be precious little left....and outfits like CHIP stipulate that they must be first in line for any proceeds from a sale...its basically a lien.
Finanical consultants have a saying....'you can't eat your house'....because so many people's retirement is backstopped by little else other than real estate. Take out a reverse mortgage and people could end up outliving all their capital.....
Cheers.