Reverse Mortgage Regulation

Posted by Charles D

November 25, 2008

It has always been my opinion that for many seniors a reverse mortgage can be a real blessing. The issue comes when unscrupulous lenders tack on excess fees. With reverse mortgage fees becoming more competitive while HECM limits increase, the writing is on the wall for class action lawsuits brought forth by senior advocates defending clients that were taken advantage of.

Chairman of the Mortgage Bankers Association, Kieran P. Quinn, said the following of reverse mortgage regulation.

“We want laws and regulation that give no quarter to fraud and irresponsible practices, and that will also set the table for safe growth of what will soon be one of our industry’s biggest products-the reverse mortgage.

“You don’t need psychic powers to see this one coming. In the fable of the Grasshopper and the Ant, baby boomers are the grasshoppers. Many will find their ‘live for today’ philosophy has left them with few fiscal resources for a tomorrow that will be longer than they planned for. Reverse mortgages represent a sane and reasonable way for seniors to take advantage of the equity in their homes. But they also represent an enormous opportunity for those who would take advantage of a fairly arcane product marketed to a more vulnerable population.

“We have to get this one right. We need the proper regulations and legislation in place to prevent abuse and at the same time allow homeowners to make sound decisions in their best interest. Decisions that can keep them in their homes. After all, at this stage in their lives, there’s no chance to rebuild a nest egg-we’re not talking about 30 year olds who may have made a costly mistake in judgment.”

We must protect our seniors in these trying economic times.