Crs Report for Congress

Since the 1970s, parties have sought to create mortgage instruments that would enable elderly homeowners to obtain loans to convert their equity into income, while providing that no repayments would be due for a specified period or, ideally, for the lifetime of the borrower. These instruments have been referred to as reverse mortgages, reverse annuity mortgages, and home equity conversion loans. Reverse mortgages are the opposite of traditional mortgages in the sense that the borrower receives payments from the lender instead of making such payments to the lender. Reverse mortgages are designed to enable elderly homeowners to remain in their homes while using the equity in their homes as a form of income. In general, reverse mortgages may take one of two forms – term or tenure. Under a term reverse mortgage, the borrower is provided with income for a specified period. Under a tenure reverse mortgage, the borrower is provided with income for as long as he or she continues to occupy the property. For borrowers, the most risky reverse mortgage is the term reverse mortgage. Borrowers have been reluctant to enter such mortgages because at the end of the loan term the borrower would likely have to sell …