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When is Competition Unhealthy?
When is Competition Unhealthy?
When it doesn't benefit the consumer...
Is competition healthy for the economy? Of course it is. It offers consumers a variety of products and prices and forces companies who charge higher prices to either lower them or create a more affordable line of products.
If this is true, why is the reverse mortgage market so exclusive?
The answer is that reverse mortgage are an niche market in and of themselves. They are only available for homeowners 62 years of age and older, who live in their primary residence and have enough equity in their home.
Richard Booth, however, disagrees. In an article published yesterday by American Banker, Booth states:
"What this niche, but growing market, needs is more non-government-backed lending.  Competition will drive down costs for consumers.   In order to accomplish this, the regulatory environment for originating and servicing must become more investor-friendly or they will continue to sit on the sidelines. "
The problem is that private lenders are practically obsolete since the 2007-2009 recession because they couldn't handle the weight of a newly raised loan limit and the credit crunch. The whole idea behind a Federal Housing Administration-insured reverse mortgage is that it is a non-recourse ... more

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