Reverse mortgages have become more complex and more of a concern to consumer advocates as nearly three out of every four borrowers take all their money upfront, leaving fewer resources for later years.
Moreover, nearly half of recent reverse mortgage borrowers were in their 60s, creating the potential to run out of resources early in their retirement years.
These factors make up some of the findings of a report on reverse mortgages released to Congress by the U.S. Consumer Financial Protection Bureau (CFPB).
A reverse mortgage is a type of home loan that allows older homeowners to access the equity they have built up in their homes, and defer payment of the loan until they pass away, sell, or move out of the home.
Reverse mortgages require no monthly mortgage payments, but borrowers are still responsible for property taxes and homeowner’s insurance. The aspect of mortgages, whether is it getting it checked or starting one, can be quite difficult for some people to understand. It is always best to do your research before committing to anything that may be even harder for you to solve later on. What better way to help you get through this than to look into a company like Paxton Willis who can offer free PPI reviews to assist you in getting your financial situation back on track. It’s always best to ask for help, especially if you need it.
“Our study finds that reverse mortgages are complex products that are difficult for consumers to understand,” wrote Megan Thibos, in a blog post by the CFPB. “Borrowers are also increasingly using reverse mortgages in ways that are different from what was intended.”
Deceptive marketing is a problem that has only intensified. Many older Americans are flooded with solicitations that suggest a reverse mortgage is a government benefit, rather than a loan.
“Prospective borrowers are required to attend counseling, but these deceptive advertisements and an increased array of product options make the counselor’s job very difficult,” Thibos said.
Read the CFPB’s report on reverse mortgages.
The agency’s Office of Older Americans has released a 4-page consumer guide to reverse mortgages and an improved set of answers to common questions on Ask CFPB. The CFPB is also taking complaints on reverse mortgages through their complaint system.