No. of Recommendations: 1
pauleckler asks,

But if the real estate market collapses to say 30% of present value, who takes the loss. Will the bank call the mortgage knowing that their loan is no longer covered by the value of the property? Who takes the loss? The bank? Or the homeowner?

If you select the "tenure option" form of a reverse mortgage, you can stay in the home until you die and the payments continue until that date. The bank is left holding the bag if the house isn't worth enough to pay back the loan.

Of course, banks keep the payouts on a reverse mortgage with the tenure option are pretty low to minimize their risk of loss.

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