Reverse Mortgages in Philadelphia
From 2009 through 2016, Philadelphia was one of the most active reverse mortgage lending markets in the nation. Older Philadelphians are attractive prospects for reverse mortgage originators because many of them own their homes and are free of mortgage debt. Elderly homeowners who own their homes free and clear are much more common in Philadelphia than in neighboring cities like Baltimore, Boston, and Washington, DC; and like seniors across the country, many retired people in Philadelphia have most of their wealth in their homes.
A new report from Reinvestment Fund examines patterns of reverse mortgage originations in Philadelphia. The report also offers accounts from homeowners, and their heirs, with reverse mortgages that went to foreclosure. The findings reveal that reverse mortgage originations in Philadelphia went disproportionately to predominately African-American communities and were oftentimes for relatively small amounts.
For those people that had reverse mortgages going to foreclosure, in-depth interviews with homeowners suggest that the risk of losing one’s home was not understood and that these loans were not used as part of comprehensive retirement planning as reverse mortgage experts have recommended. Because of the costs associated with this product, many of the borrowers were only able to access a fraction of the equity within their home.