No advertisement tells the full story about a product or service.
There are practical reasons for that, such as limited air time or print space. And for obvious reasons, information about costs or risks often is omitted, downplayed or buried in the fine print that flashes quickly across the screen or is in minuscule type.
That's why a recent study critical of reverse mortgage advertisements didn't shock me.
The Consumer Financial Protection Bureau, which seems to be turning up the heat on the reverse mortgage industry, said its research revealed the ads often leave false impressions and don't highlight critical details.
"Perhaps most concerning of all, the ads left the consumers believing that if they purchase a reverse mortgage loan, they will be able to rest assured that they can live in their homes and enjoy financial security for the rest of their lives," bureau Director Richard Cordray told reporters on a conference call. "But a reverse mortgage does not carry such guarantees."
The agency called on potential borrowers to keep their guards up so they aren't misled or confused. While that could happen with any advertisement, the significance here is magnified because these ads target older people who often are vulnerable, on fixed incomes and could be desperate for cash. They may live alone and not have anyone to consult about a reverse mortgage, and not be adept at searching for information online.
You must be at least 62 years old to qualify for a reverse mortgage, which is when the bank or lender pays you, based on the value of the equity in your home, instead of you paying the bank. You still own the home, but the lender holds a lien.
Borrowers are charged fees and interest that accrue monthly, increasing their outstanding balance, but payments aren't required until the loan becomes due. That happens when the borrower sells the home, moves, dies or defaults on the loan by not paying property taxes or homeowners insurance.
Reverse mortgages may be a good fit for some seniors but not a wise move for others, which is why it's important to understand them.
Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association, told me people had better get used to reverse mortgages because not only are they here to stay but they also are going to become more common. People are living longer and don't have the savings to fund those golden years but do have equity in their homes, he said.
"It's a product that makes a lot of sense and whose time has come and will be growing," Bell said.
read more: http://www.mcall.com/news/local/investigations/mc-reverse-mortgage-ads-warning-watchdog-20150620-column.html
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