The Financial Industry Regulatory Authority, formed from a joining of NASD and parts of NYSE Group Inc. (parent corporation of the New York Stock Exchange), is warning all homeowners with an age of 60 or more to think carefully before using reverse mortgages to get extra income, during their retirement, from their home equity funds.

In a reverse mortgage, the bank makes a payment to the homeowner, the opposite of what normally occurs. However, when the homeowner/borrower moves, sells the home, or dies, the loan must be repaid with interest; these genuinely come with a large fee, about 7% of the home´s value. With this kind of a fee attached, upon the homeowner´s death, etc., it would be difficult for any heir to pay that amount. For those heirs that are able to pay, it would definitely benefit the lender, giving them more incentive to talk homeowners into doing reverse mortgage loans.

Reverse mortgages started as a way for homeowners in their upper years, at low incomes, to be able to keep their homes, but now they are more commonly used by retirees to have a more affluent lifestyle then what they could otherwise afford. Also now as foreclosures continue to rise, some homeowners are considering doing reverse mortgages as a way to take advantage of their equity before possibly losing it. This is against the beliefs of Mary L. Schapiro, the Chief Executive for Finra, who says that home equity "is often a homeowner's most valuable asset and most precious source of retirement security." Her agency feels that reverse mortgages should be used as a final option and not as a way to raise one´s lifestyle quality or to make use of their equity.