Reverse mortgages have a bad rap, says Jack Guttentag, a professor emeritus at Wharton.
FORBES: Mortgage Professor Helps Seniors Shop For Reverse Mortgages
The CFPB is also accepting complaints from consumers regarding reverse mortgages at www.consumerfinance.gov.
As a concept, reverse mortgages are a terrific way to turn that equity into needed cash.
FORBES: Reverse Mortgages Fall Short of Their Potential, Says a New Government Report
Reverse mortgages "are not as safe as is implied, " wrote Tom Durbin, from Castle Rock, Colo.
WSJ: Rethinking Reverse Mortgages, Part 2: Pitfalls and Dangers
MetLife began originating forward and reverse mortgages in 2008 via its MetLife Home Loans business.
The CFPB is concerned that some loan officers may be promoting fixed-rate, lump-sum reverse mortgages over adjustable-rate loans.
WSJ: Rethinking Reverse Mortgages, Part 2: Pitfalls and Dangers
In 2010, that stood at 41%, including homeowners who are tapping the equity in their homes via reverse mortgages.
However, many retirees are getting themselves into trouble with reverse mortgages, especially when they take large equity payouts all at once.
WSJ: Rethinking Reverse Mortgages, Part 2: Pitfalls and Dangers
While some reverse mortgages are legit, some fly-by-night operators fleece unsuspecting homeowners.
That product accounts for about 60% of reverse mortgages, Mr. Bell says.
The CFPB has a guide to reverse mortgages, available at consumerfinance.gov.
WSJ: Rethinking Reverse Mortgages, Part 2: Pitfalls and Dangers
Retirees can use that wealth either by downsizing or doing reverse mortgages.
FORBES: Good News: Today's And Tomorrow's Retirees Are Better Off Than You Think
The Washington Post wrote about the dangers of reverse mortgages.
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That includes reverse mortgages, in which homeowners sign over property to financial institutions and, in exchange, receive lifetime monthly payments and residence rights in their homes.
In this post, he discusses why reverse mortgages should be a last resort, who might benefit from them, and what some better options might be.
Together those three players had represented 36% of the market share for reverse mortgages, leaving smaller nonbank originators as the new key players, creating new risks for consumers.
Guttentag is upfront about the dark side of reverse mortgages.
FORBES: Mortgage Professor Helps Seniors Shop For Reverse Mortgages
Reverse mortgages, which hold great promise as a way for the frail elderly to pay for long-term care costs while living at home, are failing to do the job.
FORBES: Reverse Mortgages Fall Short of Their Potential, Says a New Government Report
The upshot of a 231-page report on reverse mortgages released today by the Consumer Financial Protection Board is that reverse mortgages are complex products and difficult for consumers to understand.
At least one lender, Wells Fargo, is giving borrowers a break on origination and monthly servicing fees for adjustable-rate reverse mortgages, which allow homeowners to tap their home equity as they need it.
Under the terms of today's reverse mortgages, the spouse who isn't on the loan can be evicted when the spouse named on the loan passes away or needs to move into a nursing home.
WSJ: Rethinking Reverse Mortgages, Part 2: Pitfalls and Dangers
For people thinking about reverse mortgages, the house needs to be owned by people over 62 years of age and who own at least 65% of the house to qualify, says Thomas Holland, partner at Global Vision Advisors.
It already has a to-do list: Congress has ordered it to study reverse mortgages, private education-loan practices, why consumers who buy credit scores get numbers different from the ones lenders get and whether arbitration is the right way to settle financial disputes.
Reverse mortgages allow those age 62 or older to tap their home equity while remaining in their home by taking a loan on that equity over the period they expect to live there with the understanding that the loan is repaid when the retiree moves to another living arrangement or dies.
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