Newspaper article The Record (Bergen County, NJ)

Stockton Study Shows Risks of Reverse Mortgages

Newspaper article The Record (Bergen County, NJ)

Stockton Study Shows Risks of Reverse Mortgages

Article excerpt

While reverse mortgages are sold as safe ways for older homeowners to unlock their homes' value, more than 1,250 New Jerseyans with these loans have lost their homes to foreclosure over the past decade, according to a report released Thursday from Stockton University in Galloway Township.

The report's author, David Carr, a professor of political science at the South Jersey state college, said the numbers highlight the need for homeowners to educate themselves before taking out reverse mortgages.

"These are complex loans," Carr said in an interview.

Reverse mortgages allow homeowners to borrow against their home's value, either in a lump sum, monthly payments or line of credit. With a reverse mortgage, the homeowner does not need to make monthly repayments, and there's no need to repay the loan until the homeowner dies or leaves the house.

However, homeowners can still lose their homes if they fail to maintain the property or to pay their property taxes or home insurance.

The average reverse mortgage borrower in New Jersey is in his or her early to mid-70s, Carr said. More than 29,000 reverse mortgages were written in New Jersey from 2005 to 2015, led by Ocean County, which has a large population of senior citizens. …

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