Seniors need to be very careful about reverse mortgages, warns the Consumer Financial Protection Bureau.
Reverse mortgages not being used the way Congress intended.
In the summer of 2012 the Consumer Financial Protection Bureau (CFPB) issued a detailed a report on the growing market for reverse mortgages. The report signals a likely tightening of regulations for reverse loans. For years consumer advocates, government regulators and watchdogs have been warning seniors about the risks associated with reverse mortgages. Now, the red flags are being hoisted significantly higher. (Reuters)
“For most Americans, their home is the single largest asset they own,” the report explains. “In 2009, half of homeowners age 62 and older had at least 55 percent of their net worth tied up in home equity. Home equity is accumulated over a lifetime of mortgage payments and house-price appreciation, but generally cannot be accessed without selling the home or taking out a loan. Reverse mortgages enable older homeowners to use that home equity to enjoy a more comfortable retirement without selling their home.”
Regulation of all mortgages was transferred to the CFPB under the Dodd-Frank reform law.
According to the CFPB, reverse mortgages are not always being used as Congress intended.
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Diane L. Drain, bankruptcy attorney, retired law professor, mentor and community spokesperson.
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MUSINGS FROM DIANE:
“My point is that you must be very careful when deciding on a reverse mortgage. Talk to your family. They may be able to help without the need of exposing your most valuable asset – your home.Never trust a salesman to tell you the whole truth. Do you own homework before buying anything. The elderly (I am included) are prime targets for con artists. Be careful and trust your gut.”
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
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