The US has restricted many bad practices with regard to reverse mortgage, and now most of the loans made here are FHA loans called HECM's. Foreclosure has to be justified by specific, well defined circumstances: if you go into an extended care facility that would usually trigger foreclosure, because you are no longer residing in the home. But if you have a spouse still living in the home, that can prevent foreclosure even after death of the borrower. Actually reading the contract and discussing in with potentially affected family is the way to avoid surprises.

As for who should do it and when, it's a late in life decision. The best case would be someone in their 60's or older who has a reliable stream of income (because ongoing taxes, insurance and maintenance would need to be paid by the borrower), but with a need for a large lump sum of cash, say for medical reasons, a car, a new roof, or whatever people spend large sums of money on. The lender will only lend you a fraction of the home's value, because they can't recover their money until you vacate the home, which can be decades away. And the loan has to be insured, because sometimes real estate fails to appreciate. Essentially you receive the net present value of your home, and the lender takes the keys at some future point when you won't care about it anyway. If there's more value than is owed, the balance goes to your estate. If there's less value, that's covered by insurance. For the right borrower at the right point in life, it's a good way to go. But not for everyone.