AARP and Countrywide love it. That alone raises questions for me.
Lots of up front fees like an annuity, thus if the old folks move or die soon, these up-front costs / commissions are wasted.
If the folks leave the home soon, there may be other less expensive options to consider, such as home equity loans.
Tough to leave the home to your children, because in many cases, the home is sold to pay back a reverse mortgage.
Many old people will not get detailed financial / legal advice. The folks may not understand what they are signing.
You highlight some of the more common misconceptions about RM's. A Reverse Mortgage is probably not a good idea for someone who just needs it for the short term. That being said it is the only option for many because there is no credit requirements. Home equity loans also must have a payment plan...RM's do not. Old people may not get detailed legal advice...the ones I have done business with are savvy. As for AARP liking them...to the best of my knowledge they just state the facts.
If the borrowers receive Medicaid or other public benefits, loan advances may be counted as liquid assets .
The borrower could then lose eligibility if their total liquid assets are too high.