Today's Washington Post had an article on "Shedding the Light on Hidden Risks of Reverse Mortgages."
The main point was to ask friends and relatives considering a reverse mortgage to check out the new federal guidelines concerning reverse mortgages. The guidelines are designed mostly for banks and credit unions but point out some of the issues that persons considering a reverse mortgage should consider.
The article does say that when seniors have been properly informed and understand the reverse mortgages, they can be beneficial in providing income in retirement. It mentions that regulators say that often senior citizens are poorly informed and do not really understand the details of the mortgage. Often the direct mail marketing and sales brochures promise one thing and deliver another in the fine print including, in some instances, claiming to be a "government benefit" which they are not.
Other problems of concern were add on products with high profit margins that were inappropriate or unnecessary. In many instances the banks and credit unions had failed to point out the "cons" of reverse mortgages including borrowers responsibilities which may include paying property taxes and insurance directly .
Here is the article from the Jan 02, 2010 Washington Post.
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