The economy is truly quite global, even in real estate.  Canada, Australia, Great Britain, India and other nations have real estate financing and transaction quite similar to what we experience in the US - and other aspects of their 21^st century lives - financial woes, rising health care costs, etc - follow suit.  For developed nations, life has its universal challenges.

While browsing through mortgage and real estate websites and blogs about India (I like to research for the radio show), I came across this ominous article that gave me a chilling foreboding about the economic future.  In his article/blog entitled Reverse Mortgage in Health Care, Shantanu Dutta (a doctor by training and a development professional by vocation with an eye on India) wrote that he believes, due to rising medical costs in India - and globally - the financial solution can be met through the access of money via reverse mortgages.  I commented with the following:

What you speak of in this article - utilizing reverse mortgages to pay for older citizens' health care - is a concept both terrifying and unconscionable.  Here in the US medical costs have long since passed the level of "ridiculous" and are still spiraling upward.  Your proposal of obligating home equity to fund medical procedures for an aging population sounds like a solution for many, but it could be disastrous.

Reverse mortgages are unavailable to homeowners until all parties on title reach 62 years of age.  Even then, with the complicated and expensive (eight to 12% of loan proceeds) formula for determining cash availability, a very small percentage of the home's value qualifies.  When such obligatory expenses as property taxes, maintenance, repairs and homeowners insurance are thrown in, there will be little money for something as over-priced as health care. 

It appears the shift to use consumers' real estate equity to supplement their own health care will benefit two groups - the banking industry and the medical industry - consumer benefits will be minimal.  Why?  I see all this available cash leading to inflated medical costs being passed on to those most in need as greed and mismanagement financially bleed our older citizens bone dry.  How many knee replacements or cornea transplants would it take to obliterate every penny in a couple's reverse mortgage security blanket?  Then we'll leave our unhappy couple with their nightmare revisited - too much time and expense being met by too little money.  That's not what a reverse mortgage is for - it's to supplement a lifestyle.  Medicare and Medicaid CANNOT pass the burden of health care unto older homeowners just because strong banking and medical lobbies want to get their hands on that easy money.

Don't think special interests are at work?  According to the National Reverse Mortgage Lenders Association (NRMLA), The U.S. House of Representatives is considering legislation that would make substantial improvements to the federal reverse mortgage program, including a plan that would allow older homeowners to access greater amounts of equity from their homes.  Where do you think that extra money will go?

Our older citizens need their homes and our government needs to take care of its citizens' medical needs.  Forcing older citizens to tap into their home's equity - by reducing government-provided medical services or by the (apparently eventual) mandating of the liquidation of all personal resources first - is a grevious idea that needs to be squelched.   

Art Blanchet

Your Home-Your Money