Reverse Mortgage Loan Blog

Fears about possible recession are being stoked by continuing problems in the home mortgage market. There are also new fears about the dramatic growth of so-called “reverse mortgages”.

Some consider it a different type of predatory lending that can have as disastrous results for its victims as for those caught in the mortgage foreclosure crisis.

“When mom signed on the dotted line, she thought the salesman was her new best friend, but he was not,” said Carol Anthony.

She told senators about the reverse mortgage that turned out to be a financial nightmare for her 80-year-old mother. Such loans, which don’t have to be repaid as long as the homeowner lives in the home are being heavily marketed to seniors over 62. An online promotion for the loans calls them “a safe, easy way to quickly turn your home equity into tax-free money.”

It’s a tempting offer with many boomers reaching retirement. But critics say some seniors are being lured into deals they don’t really understand, and don’t really need.

Anthony, for example, says her mother’s closing fees alone came to $16,791 and she was sold an annuity that cost her $125,000 through Standard Life of Indiana, which Anthony says wouldn’t pay her mother anything unless she lived to be 100.

“When mom realized what the salesman had done, she became very depressed and all but stopped eating,” Anthony said. “The rage that I felt seeing her cry and hearing her call herself a fool was profound.”

Advocates for the elderly say reverse mortgages have been useful in helping some older people meet living expenses and continue to live independently. But they are also calling on the government to enact new protections against bad deals that could cost seniors not only their life savings, but their homes as well.

The insurance company mentioned in Senate testimony, Standard Life of Indiana, had no comment today.

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