The Reverse Mortgage Stabilization Act of 2013 prevents homeowners in most cases from taking all their equity at once—roughly 40% of the total amount that can be borrowed is unavailable until a year after the initial loan.
MarketWatch personal finance correspondent Robert Powell also notes that other recently enacted regulations require homeowners to demonstrate they are able and willing to pay their property taxes and home insurance. Powell writes:
Recent policy changes “should make the product safer for seniors in the future,” says Stephanie Moulton, an associate professor at Ohio State University and co-author of a 2015 paper on reverse mortgages published in the Journal of Urban Economics. Moulton estimates that such changes as limiting how much equity borrowers can extract upfront could cut the default rate on reverse mortgages in half.