Groups urge lawmakers to set tighter controls on reverse mortgages
12/08/2010
By Credit.com Staff
Many older Americans may turn to reverse mortgages in times of financial need, or to simply fund their retirement. However, Consumers Union and other advocacy groups are encouraging industry professionals to institute measures that allow for greater oversight and transparency.
Reverse mortgages can be complicated and pose a great risk to seniors who do not fully understand how they function. Reverse mortgage loans allow homeowners over 62 to receive cash by tapping into their home equity. The loan is generally repaid upon the death of the homeowner or if the individual moves. However, the costs of setting up a reverse mortgage can be expensive.
"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 Consumers Union senior staff attorney Norma Garcia. "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."
Advocacy groups say increased transparency and tighter oversight will help ward off misleading marketing tactics and the cross-promotion of other unsuitable financial products.
