OLDER HOMEOWNERS TURN TO REVERSE MORTGAGES
February 18th, 2011
Share
Older Homeowners Turn to Reverse Mortgages
By Jim Puzzanghera
RISMEDIA, With demand rising for reverse mortgages, senior citizens are particularly at risk of being misled and should be protected by greater government oversight of the industry, according to a report by Consumers Union and two California advocacy groups. In a struggling economy, older homeowners are turning to reverse mortgages as a way to pull money out of their homes, with the loan not coming due until the borrower dies. But the loans can come with hefty charges, including origination fees, closing costs and compounding interest on loan principal.
“Reverse mortgages are a very risky deal for borrowers who don’t understand the complicated terms of the loan and how quickly fees and interest charges can add up,” said Norma Garcia, senior staff attorney for Consumers Union. “Reverse mortgages should only be a last resort for seniors who want to stay in their homes and have no other alternatives to supplement their income,” she said.
The report was released by Consumers Union, the nonprofit publisher of Consumer Reports magazine, along with California Advocates for Nursing Home Reform and the Council on Aging Silicon Valley. It warned that seniors taking out reverse mortgages risk losing their homes while they’re still alive.
The groups called for strong oversight from the new federal Consumer Financial Protection Bureau, which is being launched by Obama administration appointee Elizabeth Warren as part of financial reform legislation passed this year.
The report lists concerns including misleading marketing claims by lenders; attempts to sell borrowers other products at the same time, such as long-term-care insurance or annuities, and an increasing number of borrowers defaulting on reverse mortgages, triggering foreclosures.
Consumers Union offers tips about reverse mortgages on its website,
http://www.consumersunion.org. The site’s offerings include information about applying for government benefits for seniors, getting advice from local Housing and Urban Development counselors and seeking a so-called private reverse mortgage—a loan from a family member using the senior’s home equity as collateral.
To post a comment on this blog post, you must be an HAR Account subscriber, or a member of HAR. If you are an HAR Account subscriber or a member of HAR, please click
here to login. If you would like to create an HAR Account account, please click
here.
Login to Comment
Disclaimer : The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the Houston Association of REALTORS®