Many reverse mortgage borrowers are paying high home insurance cost and loan fees because they were persuaded to spend their loan proceeds on risky investments. This is just one of the problems facing the US reverse mortgage program, which is government-insured. The FHA reverse mortgage protects lenders from losses and guarantees that seniors will maintain access to promised funds.
The FHA required consumer counseling prior to a reverse mortgage approval, and has also introduced a cheaper loan option called HECM Saver. Even though the program relieves seniors of their mortgage payments, many have still fallen behind on taxes and insurance premiums. This is partly due to the fact that lenders aren't allowed to determine if borrowers have enough money to pay their taxes and insurance under the current program rules.