Consumers scramble for cash. Predators lurk.

Some new ways the broke and desperate are trying to conjure up money, according to WSJ.

Selling your insurance policy at a greatly reduced price to a company that resells to someone who pays the premiums and waits for you to die. Charming.

Reverse mortgages. You get a loan or income stream against your house that doesn’t have to be paid until you die or move out. I’m guessing you end up with nothing even close to the actual value of the home.

Raiding retirement accounts. With or without debit card loans.

A REX agreement, you in effect sell an interest in your house (at the usual greatly reduced rate of course) for a flat amount, they get their share when you die or sell.

I wonder how long it will be before these bizarre and often predatory financial products are bundled by the thousands into bonds then sliced and diced into CDOs. Oh wait, that process already happened with mortgages, and didn’t end well, as I recall.

But that won’t stop them from doing it again. Meantime, desperate consumers are literally borrowing against their future to pay bills now.

One comment

  1. The same thing happened with HIV+ gay men in the 80s. People would by their life insurance policies and give them a boost of cash, most of which got funnled into medical care for them. Same morbid scheme, just on a smaller scale given the numbers.

    The big hit of course came when AZT was introduced and HIV+ people started living longer. Then there were lawsuits and woe from those who purchased the morbid options in the first place. I know a few people on both sides of that fence, and it wasn’t a happy thing for either of them really. I can’t imagine what will happen now that this is becoming more “main-stream”.

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