Reverse Mortgage Guide

Sen Claire McCaskill(D-MO), the author of S. 2490 — the Reverse Mortgage Proceeds Protection Act — a bill that would end the “marketing or sale of an annuity as a condition of obtaining any home equity conversion mortgage” — has asked Missouri Attorney General Jay Nixon to look into the way reverse mortgages are marketed in her home state, specifically alleged claims that reverse mortgages are a “new government program” and that they are a government “benefit” or “entitlement.”

The release by McCaskill, posted in part below, raises two points:

First, what’s not good for potential mortgage borrowers in Missouri, if that’s the case, is unlikely to be good for reverse mortgage borrowers anywhere.

Second, if allegedly unfair claims are being sent through the mails than perhaps postal inspectors are the right folks to examine the matter.

McCaskill Asks Nixon to Investigate Inappropriate Marketing of Reverse Mortgages to Missouri Seniors

WASHINGTON, D.C. – When your parents or grandparents were just starting out they proudly worked hard, saved-up and bought a home. But today, they are older, money sometimes is tight and they have become a prime targets for aggressive and misleading marketing tactics, including recent mailers to Missouri seniors promoting reverse mortgages, a so-called “new government program.”

According to the mailer, this “program” will allow them to get cash from their home’s equity to pay bills, make repairs on their home, and enhance their lifestyle. What the advertisement doesn’t tell seniors is that reverse mortgages are extremely expensive loans and reverse mortgage salespeople have been known to take advantage of trusting seniors. Today, U.S. Senator Claire McCaskill asked Missouri Attorney General Jay Nixon to investigate abusive marketing tactics that are being used to mislead seniors into signing over the equity on the only valuable asset they own – their home.

McCaskill first heard directly from those negatively affected by reverse mortgages in a Senate Special Committee on Aging hearing she chaired in December. Since that time, McCaskill has introduced a bill and successfully passed an amendment through the Senate to address the issue. However, she believes that the state can play a role in protecting seniors as well, which led her to request that Nixon look into a recent mail advertisement sent to elderly residents in Missouri that contains misleading information.

“Reverse mortgages may be a good choice for some, but I don’t want to hear another story about a senior who was pressured or misled into signing up for one, only to see their financial situation worsen as a result,” McCaskill said. “We’re working toward changing the law permanently, but changing laws takes time and we need to act now to prevent more seniors from being taken advantage of. We’ve got to attack this issue not just at the federal level, but also at the state level as well.”

Specifically, McCaskill contends that the mailer inaccurately depicts the sale of reverse mortgages as a government benefit. While the Department of Housing and Urban Development does insure reverse mortgages through the Home Equity Conversion Mortgage (HECM) program, reverse mortgages are not a government entitlement like Social Security or Medicare. In reality, the reverse mortgage industry faces little government scrutiny in the way it markets loans to senior citizens, leaving seniors unprotected from those using predatory tactics.

In Congress, McCaskill continues to push for a legislative fix to help protect seniors. With legislation advancing through the Senate, Congresswoman Barbara Lee (D-CA) has introduced a similar bill in the House of Representatives.

This entry was posted on Friday, April 25th, 2008 at 12:50 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.