Reverse Mortgage Loan Blog

U.S. Sen. Claire McCaskill wants more protection for senior citizens who are targeted by unscrupulous mortgage lenders. Specifically, she’s concerned about lenders selling reverse mortgages.

McCaskill is frustrated with companies sending misleading marketing materials that aim to rope elderly people into an expensive loan that can leave them penniless.

A reverse mortgage is a loan against your home that you don’t have to pay back as long as you live there. Unlike a regular mortgage, with a reverse mortgage, your debt rises and your equity shrinks.

“They worked hard to pay off their house and now the house will pay them back through equity, which is tax free,” said Brad Farris of Farris Mortgage company.

Farris has been selling reverse mortgages for years — and sees a great benefit for seniors with no other way to make ends meet — but he’s frustrated by others in the industry giving reverse mortgages a bad reputation.

“There are a lot of predators taking advantage,” he said.

McCaskill agrees and wants Missouri Attorney General Jay Nixon to do something about it.

“He has authority to go after fraudulent marketing and we want him to make sure the whole story is being told and we are protecting the elderly people of our state,” said McCaskill.

Specifically, she’s targeting companies that market reverse mortgages as a government benefit, much like Social Security or Medicaid.

“They may be fine in some instances but in many cases they are complicated and expensive,” she said.

Farris agrees — but says lawmakers can also help by passing tougher requirements for those selling reverse mortgages.

“You can be a third-party originator and that’s a problem. HUD (U.S. Department of Housing and Urban Development) can solve this by requiring FHA (Federal Housing Administration) approval to do these types of loans,” said Farris.

One of the companies that McCaskill is targeting has been cited by multiple other states for sending misleading marketing materials to elderly people. Nixon’s office says his investigators are looking into these marketing tactics.

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