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35 Despite the promotion of reverse mortgages to address the lack of retirement assets held by an aging population, less than 2% of eligible households take out reverse mortgages, which is small given that nearly 80% of retired households own a home, compared to only about 50% with retirement assets, and given that retirement security for many households is considered to be precarious. the best kind of program [in that it offers] assistance you pay for yourself … It's up to us to fix it for the long term." Program changes over the past few years have made the mortgages less risky for borrowers and for the government. Mortgage insurance premiums have been adjusted to provide more lender/insurer protection as well as preserving more equity for borrowers (higher upfront premium offset by lower annual premiums); assessable equity amounts are limited for the first year of the loan; and as of 2015, HUD requires a financial assessment to analyze potential borrowers' income sources and credit history, to ensure that borrowers have set-aside funds to pay property taxes and homeowners insurance. If the borrower meets the above requirements for a reverse mortgage, then the borrower would continue to have three primary ongoing obligations: 1) the borrower must continue to occupy the property as a principal residence; 2) the borrower must remain current on all property taxes and homeowner's insurance. If the borrower fails to pay property taxes or maintain current homeowner's insurance, and fails to bring these accounts current when notified, the lender can foreclose and the borrower could lose their home; and 3) the borrower must keep the home in good repair. As long as the borrower complies with these ongoing obligations, the borrower will be able to defer payment of the loan until they die, sell, or move out of the home. As well-meaning as this sounds, reverse mortgages cost more than regular mortgages, both at closing and during the life of the loan. With both types of loans, borrowers pay mortgage insurance, but with a regular mortgage, borrowers can avoid mortgage insurance with a down payment of at least 20%, but not with a reverse. e reverse mortgage premium equals 0.5% for a loan equal to 60% or less of the appraised value of the home. e premium jumps to 2.5% if the loan totals more than 60% of the home's value. If a home is appraised at $450,000 and a $300,000 reverse mortgage is taken out, it will cost you an additional $7,500 on top of all of the other closing costs. Annual mortgage insurance premium is 0.5% of the outstanding mortgage balance. Most of the fees and costs can be rolled into the loan, but unlike a regular mortgage, which compounds interest on a lower amount each month, a reverse mortgage compounds interest on a higher number. Despite the promotion of reverse mortgages to address the lack of retirement assets held by an aging population, less than 2% of eligible households take out reverse mortgages, which is small given that nearly 80% of retired households own a home, compared to only about 50% with retirement assets, and given that retirement security for many households is considered to be precarious. Several factors could positively influence growth, namely, aging population not just in the United States but throughout the world (approximately 18% of U.S. population is over 62 years old); housing wealth continues to increase; and retirees prefer to age in place. Other factors negate growth, such as complexity and cost of reverse mortgages; a perception that reverse mortgages are a last resort; and the desire to leave an inheritance. Suggested improvements for the program include lowering initial and ongoing HECM product costs, expansion of private lenders, improvement of the availability of long-term care insurance, and tightening of Medicaid eligibility rule. ese changes could increase HECM loans to approximately 12–14 % of all retired households, which would minimize government exposure and better target borrowers. Michelle Garcia Gilbert As Managing Partner of Gilbert Garcia Group, P.A., Michelle Garcia Gilbert specializes in default servicing legal work, including litigated foreclosures, real estate closings, evictions, and commercial litigation. Gilbert oversees a wide variety of operational and legal matters for the firm and manages all aspects of the firm's foreclosure practice as well as the firm's expansion into probate, estate planning, and business transaction and corporate law, and also oversees Sapphire Title & Escrow Company.