A reverse mortgage "can" be a terrific option for some situations. I helped my parents get one this year and it made a great deal of sense for their situation.
The banks are not on the hook. There is a pretty hefty up front charge that essentially tries to fund an insurance pool in case their house value goes down dramatically someday or they live longer than the actuarial tables predict. After that you and I assume the risk as tax payers. Apparently the government sees the value in folks being able to keep their homes even under less than ideal circumstances. Every town needs some retired folks to keep the property taxes down (No kids but still pay property taxes) and demand for houses up.
I would support a gradual phase out of property taxes based on age with a long residence period. The financial and cultural benefit to a "balanced" community makes sense to me. Can you tell I'm gettin older.
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