Reverse Mortgages Make Time Magazine List

Reverse mortgages are on a Time magazine list of the six problems that should be tackled first by the Consumer Financial Protection Bureau (CFPB). The article states that although “reverse mortgages should be a great financial innovation” that allows senior citizens to remain in their homes while tapping some of their equity, that isn’t always the case.

Some Abuse of Reverse Loans

The article states:

Fees on reverse mortgages often run three times as high as those for traditional mortgages. What’s more, having that large sum on hand all at once makes the seniors targets for other abuses.

Reverse Mortgages Scams Exist

There certainly have been many seniors who have borrowed with reverse loans without truly understanding their structure or fees. There also are instances of seniors being targeted by reverse mortgage scams. However, many abuses the Times described are already illegal, and those who borrower using FHA reverse mortgages called HECMs are required to get counseling fro, an FHA-a[proved counselor first. Finally, the fees on HECMs are limited by law.

The Times article also says that reverse home mortgage borrowers "basically sell their house [to the bank] but continue to live in it mortgage-free.” It’s important to note that homeowners who receive reverse loans are not selling their homes to anyone and continue to retain the title to their properties. They can even pass on their homes to heirs. If you want to get accurate information about reverse mortgage guidelines, talk with a knowledgeable FHA-approved reverse mortgage counselor.

This entry was posted on Thursday, July 8th, 2010 at 1:13 pm 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.