That’s interesting. Question: is it a “loan” if you never have to pay it back, or is it a partial equity transfer masquerading as a loan, and backed up by the Federal government (i.e. - us taxpayers) in the case of default. Just curious.
It is a loan which features a non-recourse feature which means that the lender can only look to the property for repayment. My fingers would get tired explaining every facet....but it’s a financial instrument that is a wonderful tool for many people. There are numerous sites that explains in detail Reverse Mortgages....
It’s a loan, as long as you define a loan which you don’t really have to repay as a loan. (if you don’t go along with that definition all of the sub-prime mortgage originators on this thread will, apparently, go nuts)
Depending how it is structured it can be a loan against equity or act as an annuity. Remember all the “Tax Free” money taken out is less money they can take as a death tax. You could even take a RM and put the proceeds into an insurance policy which could provide a hedge again death taxes.