Citing recent cases in which the Consumer Financial Protection Bureau (CFPB) cited reverse mortgage lenders for their advertising practices, a new Forbes column aims to explore ways in which senior borrowers can stay ahead of issues. that may arise due to insufficient or inaccurate information about the loan itself.
“While this can be a useful tool for leveraging equity without paying the monthly home loan payments, it can also be risky if the borrower is not fully aware of what he (and his heirs) might be up to. engage, “the column reads. . “This is in part why the government recently cited some reverse mortgage lenders for deceptive and deceptive lending practices, which have resulted in elderly homeowners losing their homes in some cases.”
Primarily, the column cusp is designed to be informative, as many of the ideas expressed are those shared by people in the reverse mortgage industry. Namely, the idea of the place of education as an absolute priority. However, the column takes some prescriptive positions on what it sees as the “downsides” of a reverse mortgage, largely related to loan requirements.
“Among the most pronounced disadvantages of a reverse mortgage are the rules about the landlord’s lease and when the loan must be repaid,” the column read. “For example, lenders require the borrower to live in the house in order to defer repayment. However, if there is a medical emergency and the borrower has to stay in a hospital or facility for an extended period of time, some lenders will require that the amount owed be paid in full. Otherwise, they can seize the property.
The owner of a Dallas-based reverse mortgage brokerage describes for the column advice he offers, advising families to “bring [the borrower] home for a night “to avoid breaking such a rule, he said.
“Another common landmine for the elderly is not paying property taxes. It can also lead to foreclosure of the property. Some seniors may be confused as to what exactly to pay, especially when signing a 200-page document, ”the column read.
Still, a potential benefit of a reverse mortgage is highlighted by the column over a Home Equity Line of Credit (HELOC).
“The owners who had [HELOCs] during the financial crisis could recall that the banks froze the lines of credit at the time ”, one reads in the column. “This could be worrisome for people who need this cash on hand for emergencies or unforeseen expenses. The advantage of HECMs is that the lender cannot reduce or freeze your line of credit.
Read it column at Forbes.