Reverse Mortgages Still Confusing For Many

reverse-mortgages-confuseAlthough Reverse Mortgages have been around for more than 20 years, a recent study conducted by the CFPB (Consumer Financial Protection Bureau) concluded that there is still a lot of confusion among consumers about what reverse mortgages are and how they work.

The agency however, also concluded that the loans are a good option for the right borrower. Richard Cordray, CFBP Director, stated “Reverse mortgages are complex and have the potential to become a much more pervasive product in the coming years as the baby boomer generation enters retirement.”

The agency outlined concerns in the report including consumer education, advertising for reverse mortgages, cross-selling, counseling, costs and fees and tax and insurance defaults, non-borrower protection and fraud.

Overall, the CFPB found reverse mortgages can be difficult for consumers to understand and that they are using the loans for different purposes than in the past.

One area of concern was HECM reverse mortgage counseling, which the bureau says is in need of adequate funding and further examination for its effectiveness.

Codray went on to say; “In order to protect people against the misuse of reverse mortgages, we need to educate and inform not only older Americans but also the caretaker generation to learn about these financial products, and others, to help them make the best decisions possible.”

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