No brownie points from me for trying to exploit the elderly on Fox News, which used to run this ad constantly.

An Open Letter to Fred Thompson About Those Reverse-Mortgage Ads - Punchnels

http://gawker.com/5574904/fred-thomp...erse-mortgages

Founded in 2004, and approved by the US Department of Housing and Urban Development, AAG is one the nation's leaders in reverse mortgages.

However, here's what your grandma needs to know: Fred Thompson, the former United States Senator and fictional New York City Prosecutor (Law & Order) and rear admiral (Hunt for Red October) is the spokesman for AAG's line of reverse mortgages. And he clearly hates old people. A lot. Otherwise, why else would he endorse such a fiscally damaging investment instrument? Here's how a reverse mortgage works. If you're over 62, seniors can access the equity in their home - and they do not have to make any interest or principal payments for as long as they live in the house. They can get a lump sum payout or get cash in monthly installments. That's the good news. Now, here's the bad news.

• In a reverse mortgage, just like a regular mortgage, borrowers have to pay points, origination fees, etc up front. So, getting the money is expensive. Which will be a hardship on senior citizens who are already cash strapped.

• The interest rate on a reverse mortgage is most often higher than that of a conventional mortgage. Plus, it's compounded monthly. Meaning, every month -- since seniors are not paying down the principal -- they are paying interest on more and more money.

• If if becomes necessary for an elderly person to move into an assisted living facility - at least 25% will need this between ages 62 & 95, while 50% over 95 will need assisted living care -- the loan must be paid back, in full, first. This could leave the borrower with no money what-so-ever -- if they lived longer than they budgeted for -- and an inability to afford the extra care they need. It also shifts the burden of caring to children... or the state.