Richard Cordray, director of the Consumer Financial Protection Bureau,… (Joshua Roberts / Bloomberg )
WASHINGTON -- As the Consumer Financial Protection Bureau released a report Thursday warning of the risks of reverse mortgages, it also offered tips for people considering taking one out.
The agency's four pages of guidance -- which urge caution -- is one of several resources online for older homeowners thinking of using a reverse mortgage to tap their home equity. Consumers Union, AARP, and the National Reverse Mortgage Lenders Assn., an industry trade group, also offer detailed advice on how to approach the complex financial product.
“Reverse mortgages are very complex and can be easily misunderstood by homeowners looking for a way to tap into their equity,” said Norma Garcia, manager of Consumers Union’s financial services program. “Unfortunately some reverse mortgage lenders engage in deceptive marketing and other unfair practices that can undermine the financial security of homeowners heading into retirement."
She said that the consumer bureau "should take action to protect seniors who are vulnerable to scam artists peddling abusive reverse mortgages.”
The bureau's report warned that many older Americans are confused about how reverse mortgages work. It cited concerns that more seniors are obtaining reverse mortgages at a younger age -- the minimum is 62 years old -- and are taking the money in a lump sum instead of annual installments.
The consumer bureau is considering new regulations and is seeking public input.
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