Monday, October 15, 2012
Reverse Mortgages in the news
Today's New York Times reports that the Consumer Financial Protection Bureau is investigating the reverse mortgage industry for a number of abusive practices. Problems in that industry have increased since major national lenders such as Wells Fargo and Bank of America have gotten out of the field due to declining or stagnant home values. Into the void created by the big bank departure have stepped smaller entities, some of which are promoting loans in a deceptive manner that leaves some seniors facing entirely unexpected foreclosure. We see very few reverse mortgages here in the Middlesex North District. I don't think that particular financial product has caught on here. Still, it must be very tempting for cash-poor, house-rich seniors to try to extract some of the equity from homes to provide living necessary living expenses and a comfortable retirement.
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Although a reverse mortgage has many potential benefits for senior homeowners, it also has its drawbacks. Reverse mortgages can have higher up front fees compared to other types of financing. As the homeowners get to retain the title of the home, they have the added burden of paying for insurance, taxes, maintenance and all other expenses related to the property. It is best to seek advice from a financial professional to see if a reverse mortgage is right for your situation.
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