In fall of 2006, the Government National Mortgage Association (Ginnie Mae), a government organization, announced with pride that it was going to securitize reverse mortgages — that is, sell them to investors. Uh-oh. The securitization process in subprime mortgages is bringing the big Wall Street financial houses to their knees, begging for financial support from countries such as Singapore. The American institutions hold portfolios of smelly mortgages and have already written down tens of billions of dollars, and nobody knows how bad the losses will get.
The reverse mortgage market is much, much smaller than the subprime market, but it could hurt some investors. It’s a shame that a bunch of avaricious peddlers have infiltrated reverse mortgages, which can be a very useful product for older people.