The Next Big Banking Mess

I am placing my bet on Reverse Mortgages since they are targeted at the elderly.  The idea is that they get money for the equity in their house.  There are no monthly payments, which is odd since it is a motgage.  From what I have been able to tell, the person taking out the reverse mortgage doesn’t pay anything, that is a mess left to the family once the person passes away.  In other words, the family gets saddled with the mortgage or forfits the house.  My bet is that the banks pile on interest and fees and account it as assets like they did with the credit default swaps that seemed fine until the housing market collapsed.  In less than four years, we have built another problem using the exact same reasoning as the last.  Check back with me in a few years.  If anyone can show me that Reverse Mortgages are not just another unregulated paper scheme, please give it a go.

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