Various news outlets have reported on reverse mortgages and the series of program changes that have now made these loan products safer and more effective retirement planning tools. Perhaps none, however, have given reverse mortgages such an enormous viewership platform as a recent NBC Nightly News segment that aired this month.
More than half of people over age 55 have little or no retirement savings, said NBC Nightly News Anchor Lester Holt. But while reverse mortgages may have been controversial in the past, Holt notes consumer advocates now say these loans could be a “smart way to bring in more money.”
“Thanks to new government regulations, reverse mortgages are now actually harder to get, and with tougher lending standards in place, they’re actually becoming less controversial and more popular,” said NBC Business Correspondent Olivia Sterns. “Still, experts warn they are not for everybody.”
For the Rothschilds, a reverse mortgage was the solution to stay put, but after 30 years and four children later, the Cartersville, Ga. couple couldn’t afford to stay after the downturn hit. That is when they decided to get a reverse mortgage.
“It was scary. It was devastating,” Mr. Rothschild said during the segment.
When asked by Sterns if they were worried about the risks of getting a reverse mortgage, the Rothschilds admitted that sure, they were concerned, but that they also “did a lot of education.”
“I think reverse mortgages are going to be a lifeline for millions of retirees in the years to come simply because they are under-saved for retirement,” said Greg McBride, CFA, senior vice president and chief financial analyst at Bankrate.com.
The Rothschilds borrowed $250,000 in equity from their $440,000 home. If they sell or die, they only get what’s left of the equity, Sterns noted, which would be $190,000. The bonus of not having a mortgage payment, she said, translates into the Rothschilds now saving $2,500 each month.
“For the Rothschilds, it all added up to a little more breathing room as they retire,” Sterns concluded.
For reverse mortgages, appearing on primetime national news is huge exposure for the product, even if for only a two-minute segment.
NBC Nightly News dominated its competitors, both ABC and CBS, in the evening news ratings for the week of April 18, generating more than 8.1 million viewers, according to recent data from AdWeek.com.
The reverse mortgage segment aired at the end of that week on Friday, April 22.
View the NBC Nightly News segment.