Dangers of Reverse Mortgages

There are dangers prowling in every corner even with mortgages. The reverse mortgage is no exception to that. You should be aware of frauds and scams so that you don’t lose your money. There are many reputable firms; but there are those that are fraudulent. These are usually fake sites that lure people in and charge huge amounts. Senior citizens can become a target because they are vulnerable. Information is free from HUD. These companies ask for 6-10 percent for names of lenders and filling applications. Do not sign a contract under duress from an agent.

A recent report by ASIC who interviewed 29 borrowers found that they did not understand how a reverse mortgage worked. They did know how long it would take to pay off the loan. There was no long term planning. They did not realize that this type of loan was only paid when the client died or moved into a long-term housing. This mortgage leaves borrowers with little money and unable to move into a long-term facility. On top of that, their family’s inheritance significantly dwindles. The lenders were not forthright about risks and talked the borrower into a higher amount.

Remember to get quotes from more than one lender. Look around, gather information from different sources, and compare them. This can help protect you and your estate. There are many frauds by phone, so be careful not to give out information. Keep your eyes open and beware of one of the biggest risks, foreclosure. You could find yourself in real danger and sleeping on the street! This is where buyer beware comes in. Make sure you read the fine print! Many of these documents are just adapted contracts. You could be in default for outstanding debts or uninsured property.

It is important to understand the dangers of reverse mortgages. If you have elderly family or friends make sure they know the facts and are not taken advantage of in a time of weakness. Make sure they look around, source out more than one lender, and compare the information. If not they could be left trying to re-pay an enormous debt. Lenders have to be fair too. They need to re-vamp their contracts to reflect changes. Older individuals need respect and should not have to take things on trust, especially if there is no trust there to begin with.




Reverse Mortgage News:
Oakland Tribune - Tom Purcell: The Gift of the Magi Revisited
December 3, 2008 -- TWO MAXED-OUT credit cards and a checking account with only $632. That was all. There was nothing Sabrina could do but plop onto her designer couch...


FDIC Agrees to Sell IndyMac to Investor Group (Washington Post)
The federal government has agreed to sell the skeleton of IndyMac Bank, the aggressive California mortgage lender whose July failure portended the autumn crisis of the financial system, to a group of private investors...


Reverse mortgage loan: what is it all about? (The Hindu)
Any individual, above 60 years of age or any married couple with either husband or wife above 60 years of age, who are citizens of India, will be eligible senior citizens. Where does a senior citizen go for such a ...


More Seniors Consider Reverse Mortgages - U.S. News & World Report

More Seniors Consider Reverse Mortgages
U.S. News & World Report, DC - Dec 11, 2008
Seniors took out 112100 Home Equity Conversion Mortgages, a government-backed reverse mortgage, in fiscal year 2008, which ended September 30, .
Reverse mortgages getting more popular in tough economy Bellingham Herald
Double, double toil and trouble, Here comes another bubble! Motley Fool
all 7 news articles
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Plan B for retirees who counted on home equity (Reno Gazette-Journal)
The safety net is almost gone, the nest egg is cracking...


Investors to Buy IndyMac for $13.9 Billion (New York Times)
A seven-member group of investors has formed to buy the remnants of a failed lender, IndyMac Bank , for $13.9 billion, federal regulators confirmed Friday...


IndyMac deal slowed by Fannie mortgage issues: source (Washington Post)
WASHINGTON (Reuters) - The pending sale of failed mortgage lender IndyMac hit a snag as mortgage giant Fannie Mae negotiates with federal regulators over the value of about $1 billion in obligations it believes IndyMac owes it, according to a source familiar with the matter...


Housing Push for Hispanics Spawns Wave of Foreclosures - Wall Street Journal

Housing Push for Hispanics Spawns Wave of Foreclosures
Wall Street Journal - 6 hours ago
But combined efforts to open the mortgage pipeline to Latinos proved successful. "We saw what we refer to in the advocacy community as reverse red-lining," .
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Plan B for retirees who counted on home equity (Reno Gazette-Journal)
The safety net is almost gone, the nest egg is cracking...


India Stocks Near 2-Month High on Rate Cut, Stimulus Measures (Bloomberg)
Jan. 5 (Bloomberg) -- Indian stocks rose, with the benchmark Sensitive index at a two-month high after the South Asian nation cut interest rates and unveiled a stimulus package to revive an economy growing at its slowest pace in six years...


Oakland Tribune - Real Estate calendar 11/30
November 30, 2008 -- Buyers and sellers Amador Valley Adult & Community Education, 215 Abbie St., Pleasanton. Registration information: 925-426-4280,...


Business Wire - Fitch Revises Thornburg's IDR to 'CCC' on Interest Payment Cure; Rating Watch Negative
December 23, 2008 -- NEW YORK -- Based on Thornburg Mortgage Inc.'s (Thornburg) Dec. 12, 2008 payment within the 30-day grace period of interest due on Nov. 15, 2008 for...


King May Abandon Bank-Aid Reticence as Slump Worsens (Update1) (Bloomberg)
Jan. 5 (Bloomberg) -- Bank of England Governor Mervyn King may abandon his reticence to shore up the financial system as the economy slides deeper into a recession...


Australasian Business Intelligence - Becton freezes $220m in funds.
December 4, 2008 -- Byline: Anthony Klan Nov 11, 2008 (The Australian - ABIX via COMTEX) -- A moratorium on redemptions from the Becton Diversified Property Fund...


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