Reverse Mortgage Loan Blog

Senior citizens are being targeted by aggressive and exploitative marketing of reverse mortgages, according to the National Consumer Law Center.

In a new report, the law center compared some of the tactics used by the reverse mortgage industry to those used by subprime mortgage lenders a few years ago. The report accused some reverse mortgage lenders of advertising reverse mortgages as “a government benefit” that seniors are entitled to, rather than what they are — loans against the value of their homes.

In addition, the law center charged, some loan companies reward brokers with higher commissions if they put clients into more expensive loans. The report called for a federal ban on such rewards, called “yield spread premiums.”

A spokesman for the reverse mortgage industry disputed many of the report’s findings, arguing that it’s not fair to require brokers to judge whether a loan is suitable for a client.

“Who can determine what’s suitable for someone, other than the individual themselves?” said Peter Bell, president of the National Reverse Mortgage Lenders Association.

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