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.
“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.”
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