HECM credit lines can be used to reduce retirement income instability

The HECM reverse mortgage is an ingeniously designed instrument with multiple possible uses, but its full potential has yet to be realized. A major reason is that it has been treated as a stand-alone, rather than as part of an integrated retirement plan. Reflecting its use as a stand-alone, HECMs have been used most heavily by retirees in desperate financial circumstances. This has subjected the FHA insurance reserve to adverse selection, resulting in large losses.