For decades, the term reverse mortgage has carried a stigma. Words like “scam” or “trap” still get tossed around in conversations about it. Yet, the truth is far more nuanced. In fact, reverse mortgages have helped countless homeowners tap into their equity, increase retirement income, and stay in their homes longer. So why does public opinion remain so split?
To fully understand where the skepticism comes from—and why it’s gradually shifting—we need to look at how the reverse mortgage evolved, what went wrong early on, and how regulatory safeguards have changed the game.
A Reverse Mortgage Was Originally Meant to Help, Not Harm
The very first reverse mortgage was created in the early 1960s. It was made to solve a single problem. How could an elderly widow remain in her home after losing her spouse’s income? This groundbreaking idea allowed her to access her home’s equity without selling the property or making monthly loan payments.
As the concept caught on, banks began offering these loans through the 1970s and ’80s. However, because the product was new, there were few regulations to protect borrowers. And while there were no inherent flaws in the design, there was confusion, misuse and negative consequences because of the lack of oversight.
Read More Why the Reverse Mortgage Still Gets a Bad Rap—And Why That’s Finally Changing
