Reverse mortgages are great news for qualified borrowers. The news for the children of those borrowers may be a bit less cheery. "Those of us in our 40s are the first generation to really profit from the real-estate investment of our parents," says Mary Ann Lindley, a lifestyle columnist at the Tallahassee Democrat. "Upon their deaths, we inherit homes that are highly valuable when sold on today's market. With reverse mortgages, our parents are getting their own inheritance and spending it." Many boomers are counting on the windfall from their parents' life insurance policies and home equity to give them the push they need to make one-time investments in homes, says Lindley. Without that windfall, some boomers feel their own American Dream is going down the tubes. "If a senior has no heirs or truly needs the money, reverse mortgages can be a great idea," she says. "But under some circumstances, reverse mortgages can strain family ties and become major family issues." On the contrary, says Michael A. Hyman, senior vice president of Wendover Funding, a mortgage bank in Greensboro, North Carolina. "Adult children of seniors are especially interested in reverse mortgages," he says. Many of them are sandwiched between the needs of their children (especially college costs) and those of their parents. "These adult children are truly concerned that their parents will go through foreclosure because they do not have the assets to keep up monthly mortgage payments. Their other big concern is that selling their parent's home to raise cash may not provide enough to help their parents." Bronwyn Belling, a reverse mortgage specialist with the AARP, agrees. "About half of our calls are from adult children," she says. "They are looking for a way to help their parents remain in their own homes for as long as possible." But, Belling maintains, there is still a lot of resistance to the product, especially among some cultures. "African-American seniors see handing the home down to the next generation as a basic tenant of homeownership. It is often the children who persuade the parents to get the reverse mortgage.

Whatever their long-term effects, today's reverse mortgage products are the beginning of a bigger trend. Lenders are now devising a new generation of home-equity products for younger homeowners. The idea is "a flexible, forward-reverse type of mortgage, one that follows the life cycle of the borrower," says AARP's Belling. "Mortgage holders could pay in until they have major expenses. While their children are in college, for example, they could borrow from the loan. They would revert to the pay-in scheme once the children are on their own. It makes the home mortgage a more effective tool for all homeowners."