NationalMortgageNews reports senior citizens, the primary target of reverse mortgages, do not fully understand its risks and features and the tradeoffs involved, leading the Consumer Financial Protection Bureau (CFPB) to plan stronger disclosure requirements. In a conference call with reporters, CFPB Director Richard Cordray said, “They may focus primarily on the amount of money they can garner in the short term, and underestimate the long-term costs and risks.” A study by the bureau last year disclosed 73% of borrowers accessed nearly all of their home equity available in the reverse mortgage, with little or no planning for taxes and insurance in the future. While the bureau does not plan to eliminate any current products, Cordray reiterated CFPB will use its enforcement authority to root out unfair and deceptive practices. MHProNews.com has learned of mailed literature claiming a reverse mortgage is a government benefit.
(Image credit: Senior Equity Financial)