Know your rights when taking out a reverse mortgage. Also, know who to turn to if you get into trouble.
Reverse Mortgage Rights
Reverse Mortgage Consumer Protections
Here are three major ways that you are protected when taking out a reverse mortgage.
Counseling - Most reverse mortgage loans are Home Equity Conversion Mortgages (HECMs). These loans are insured by the Federal Housing Administration (FHA). HECM loans require counseling. The counselors are trained and pass exams under the US Department of Housing and Urban Development or HUD. To find a list of counselors in your area, go to the HUD Website's list of HECM counselors.
Total Annual Loan Costs or TALC - This is a disclosure that the reverse mortgage lender is required by law to give you. It takes into consideration all the costs associated with a proposed reverse mortgage and calculates a single annual rate similar to an Annual Percentage Rate or APR.
National Reverse Mortgage Lenders Association or NRMLA - This organization holds its member reverse mortgage lenders to high standards of conduct. Ask your lender if he or she is a member of this advocacy group or if he or she is familiar with the NRMLA standards of good conduct.
Who To Turn To If Things Go Wrong
Groups and agencies that advocate on behalf of seniors abound. Here are a few that you can contact for help.
AARP - Formerly known as the American Association of Retired Persons, this advocacy group is among the oldest and largest. Its Website has an extensive section of reverse mortgage information and news and can be found at www.aarp.org
NCOA - The National Council on Aging is another great resource for reverse mortgage information. It is the leaders in the education of potential HUD counselors and even offer free counseling. Its Website address is www.ncoa.org.
HUD - US Department of Housing and Urban Development oversees the Federal Housing Administration or FHA. FHA insures 90% of reverse mortgage loans. The HUD Website at www.hud.gov is an excellent resource and a great place to find your counselor.
Federal Trade Commission - The FTC is a government run consumer protection agency. It oversees commerce such as the banking industry. The FTC would be involved in any large violations by a reverse mortgage lender. Its website is www.ftc.gov.
Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.