Reverse mortgages allow homeowners, 62, and older, to borrow against the accrued equity in their homes, but according to the Consumer Financial Protection Bureau’s latest report, they’ve received many complaints from consumers who have experienced problems with reverse mortgages.
Reverse mortgages typically can help some older homeowners meet financial needs in retirement, however it has a tendency to leave a tough situation for the borrowers family.
The CFPB looked at 1,200 reverse mortgage complaints received from when the bureau started taking complaints, on Dec. 1, 2011, and Dec. 31, 2014. Reverse mortgage complaints comprised about 1% of all mortgage complaints, by all ages, during this timeframe.
Although reverse mortgages are only available to people over the age of 62, only about 42% of the complaints were from consumers who described themselves as 62 or older. Instead most of the complaints were the younger spouses or family members of borrowers.
Due to the complaints that the CFPB has received, they outlined three things borrowers and their loved ones should do if they have a reverse mortgage.
1. Verify who is on the loan:
If you took out a reverse mortgage with two borrowers, check with your reverse mortgage servicer to make sure its loan records are accurate. Call your servicer to find out what names are listed on your loan.
2. Make plans for the non-borrowing spouse:
If your reverse mortgage is in the name of only one spouse, contact your loan servicer to find out if the non-borrowing spouse may qualify for a repayment deferral. A repayment deferral allows a non-borrowing spouse to remain living in the home after the death of the borrowing spouse. If not, make a plan in the event the borrowing spouse dies first and the loan becomes due
3. Keep children and heirs in the loop:
Make sure your adult children or any family members living in the home know what to expect when your reverse mortgage comes due. If they wish to keep the home, contact your reverse mortgage company for written information that explains their options. Discuss this information with your family and follow up with the reverse mortgage company for anything you don’t understand.
Recently, a clip of Televangelist Pat Robertson hurling some pretty irresponsible advice to one of his long-time viewers of “The 700 Club,” was trending, giving a good example of the problems that loom around reverse mortgages.
HousingWire Executive Editor Jacob Gaffney commented on in it a blog explaining what Robertson viewed to be correct, versus the truth, which the viewer hopefully finds helpful.