U.S. Senate Committee to hear Financial Freedom Senior Funding Case

A U.S. Senate Committee looking into abuses of reverse mortgages will hear testimony today contending that Irvine-based Financial Freedom Senior Funding Corp. took advantage of elderly clients.

Ronald Marron, a San Diego attorney who represents three elderly women who bought Financial Freedom’s reverse mortgages and were also sold deferred annuities from other companies, called the financial products “an equity stripping scheme” and “a liquidity time bomb.” Marron’s client, Ernestine Boach sued Financial Freedom in San Diego County Superior Court.

Financial Freedom, a subsidiary of Indymac Bank, denies it abused clients and issued written testimony to the Senate Special Committee on Aging contending its products enhance the lives of seniors “by providing financial security and independence.”

Click here to see Financial Freedom’s testimony.

Click here to see Marron’s press release.

Reverse mortgages enable homeowners to get a steady stream of income from their home equity. Marron said his clients were charged high fees for the deferred annuities, which also kept the cash from the reverse mortgages out of reach for several years. His clients would have been forced to pay penalties to cash in the annuities before their maturity date, Marron said.

U.S. Sen. Claire McCaskill, D-Mo., is planning to introduce legislation to protect consumers of reverse mortgages, which have become increasingly popular among retirees.

The Special Committee on Aging will hear testimony from representatives of the Department of Housing and Urban Development, the American Association of Retired Persons and others with knowledge of reverse mortgages.

Written by charles dennis on December 8th, 2007 with comments disabled.
Read more articles on News.