Fed proposes rules to improve reverse mortgage disclosures
August 16th, 2010
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The Federal Reserve wants reverse mortgage lenders to make the terms of loans clearer for borrowers. The Fed proposed that reverse mortgage disclosures be changed so that consumers have a better understanding of the pros and cons of borrowing money.
Reverse mortgage disclosures
Disclosures for reverse loans are usually very lengthy and don’t always do great job at describing the features of loans. The proposed changes would make language in disclosures easier to understand and would give information that pertains specifically to the borrower’s actual mortgage terms.
Reverse loan counseling
The proposed changes also are aimed at protecting consumers from pressure to buy other financial products, such as pricey annuities. Some reverse mortgage lenders have been aggressive about getting borrowers to sign up for pricey annuities or long-term care insurance. The proposed rules would keep reverse mortgage lenders from making borrowers agree to purchase other financial products in order to get approved for a reverse loan. The rules also would require that borrowers receive reverse mortgage counseling before a creditor could impose nonrefundable fees for a reverse loan or close on a loan.
Reverse mortgage guidelines
Reverse mortgages can be a useful financial tool for seniors looking to supplement their incomes. But it is important for anyone interested in borrowing money this way to make sure they are getting all the facts about reverse mortgage guidelines. Never sign paperwork for a reverse home mortgage without having all your questions and concerns addressed by a reverse mortgage counselor first.
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