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ANDREA SEABROOK, host:

Welcome back to All Things Considered from NPR News. I'm Andrea Seabrook. Big news this week for battered mortgage holders. Yesterday, JPMorgan Chase announced a plan to rework the mortgages of as many as 400,000 of its customers. And today, new rules go into effect for what are called reverse mortgages. That's a way for folks of retirement age to draw on the value of their houses, tax free. The new rules make reverse mortgages cheaper and more accessible just as demand for them is surging. From member station WBUR in Boston, Curt Nickisch reports.

CURT NICKISCH: Larry and Mary Holland are retired, and they're happy. The 78-year-olds have enough cash flow that they got new windows for their modest home in the Boston suburbs. Sitting on their living room couch with her feet barely touching the brown-shag carpet, Mary Holland says she and Larry even have enough money to splurge now and then by going to a casino in Connecticut.

Ms. MARY HOLLAND (Retiree, Norwood, Massachusetts): We enjoy going down there once a month or every other month or something, you know. And we don't lose a lot because we don't like to lose. We don't win a lot, but we have a good time. We can afford to do that once, you know.

NICKISCH: The Hollands can afford to do that because they took out a reverse mortgage on about a quarter of the value of their home. That means the house is partly owned by the bank now, but they receive $800 a month tax free they otherwise would not have. Lately, more elderly Americans are joining the Hollands in seeing reverse mortgages as a useful financial tool rather than a last resort.

Mr. JOHN BRODERICK (President, Your Home for Life Company): Public perception is changing as more of these are being done.

NICKISCH: That's John Broderick. He sells reverse mortgages through his Massachusetts company, Your Home for Life. He says, as the stock market tanks and takes 401Ks down with it, his business has been climbing.

Mr. BRODERICK: So many folks are seeing their retirement accounts disappear, and yet, they still have this asset, the home, and this is really the only vehicle where you can get out the equity without having to make a payment or sell your house.

NICKISCH: Now, it's easier to get reverse mortgages. The limit for federally-insured ones has been raised to more than $400,000. That makes them more attractive in expensive real-estate markets on the coasts. Plus, anyone who sells a reverse mortgage is banned from hocking other financial products to the same customer, correcting an abuse of the past. Finally, the origination fees are capped, though Boston financial planner John LeBlanc says those fees can still be high.

Mr. JOHN LEBLANC (Financial Planner): Frequently, you're talking about 11 or 12 percent of the amount that you can borrow. It's still expensive. It's still buyer beware.

NICKISCH: And there's a psychological barrier for many people. A home they may have owned free and clear for decades is going back to the bank.

Dr. ALICIA MUNNELL (Director, Center for Retirement Research, Boston College): This gut-wrenching thing, that you won't have a house to leave to your daughter or your son or you niece.

NICKISCH: Alicia Munnell heads the Center for Retirement Research at Boston College. She said it's unfortunate, but the way things are going, more and more retirees will need to take out reverse mortgages.

Dr. MUNNELL: I think it's going to be a necessity, and so we all have an interest in making that market work as well as it possibly can.

NICKISCH: Munnell praises the new regulations to make reverse mortgages more consumer-friendly and less costly. But even before today's new rules, it was worth it for Larry and Mary Holland in Norwood, Massachusetts.

Ms. HOLLAND: Just so I don't have any money worries, you know. Our children have their own places, so we don't have to worry about, you know, saving it for them. So, we just have a very happy life.

NICKISCH: Boston College's Munnell hopes that other people's lives will improve, too, as the reverse mortgage market grows and increased competition brings consumer costs down more. For NPR News, I'm Curt Nickisch in Boston.

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