Is there any opportunity that is safe from scams? Seems not! The National Consumer Law Center recently reported that some of the aggressive and abusive lenders from the subprime mortgage market, whose practices helped get us into our current economic mess, are back. And this time they are trying to run their deals in the reverse mortgage arena.
Reverse mortgages are legitimate and very beneficial loan products that help people age 62 and over stay in their home and receive extra, tax free income. They are especially helpful in the current economic environment when seniors can have trouble paying for home repairs or medical expenses, as well as suplementing retirement incomes or Social Security. Over 100,000 seniors took out reverse mortages in 2008 and that number is growing. As a result some greedy and less ethical lenders see this growing market as an opportunity and they are now trying to get some of that business. Like their counterparts in the subprime market a few years ago, their ‘deals’ will look like legitimate reverse mortgages, but actually could adjust mortgage loan terms to make more profit for themselves, thus making those reverse mortgages less of a good deal for the senior homeowner.
The other way the reverse mortgage market is vulnerable is that once the homeowner completes the mortgage process and receives their cash, these greedy lenders suggest various ‘investment’ or ‘insurance’ products that generate huge commissions for the sellers and kickbacks for the lenders, but (surprise!) are not profitable or safe for the homeowner. The government, and entities like the National Consumer Law Center, are working diligently to make the reverse mortgage market safer through improved structure and regulation. In the meantime, senior consumers can be assured that the reverse mortgage they seek is legitimate, safe, and effective for their needs by selecting the right lending institution. It is important that the bank you select is
- one you and your advisors know and trust, a bank that has been in business for some time with a good track record, and will be in business years down the road.
- one that offers good service and counseling, whose reverse mortgage department is available daily and very willing to help you and to answer your questions, before during and after the mortgage process is completed.
- one whose lenders who are specialists in reverse mortgages, and have long and successful track records and experience with reverse mortgages.
Don’t let the scammers scare you away from a mortgage product that can be a great solution for you! Do your homework before you sign on the dotted line – it will keep you safe. If you want more details or information, please contact me at any time.