A reverse mortgage is an unique kind of house loan. It lets senior citizens 62 and older tap the equity in their homes and defer payment of that loan up until they die, move or sell the houseyour home.
The Consumer Financial Defense Bureau (CFPB) is worried about the way these loans are commonly marketed to elders.
A lot of the ads give the impression that these loans are totally risk free which is not true, stated CFPBs Stacy Canan. In fact, theres a 10 percent default rate in reverse home loans which is about two times the amount in standard home mortgages.
And a default can result in repossession.
Canan says the CFPBs focus group screening discovered that numerous senior citizens don’t recognize that a reverse mortgage is a loan protected by their home. This might be due to the way these loans are advertised.
In numerous of the ads, they hardly ever describe it as a loan, she stated. Its typically described as a government program. Commonly its referred to as tax-free cash, things of that sort.
A reverse mortgage might make sense for some people those who understand how it works and who make the effort to weigh the pros and the cons.
More Info: Study: Reverse Home loan Ads Confuse Consumers