Consumers Union, the policy and advocacy division of Consumer Reports, is calling on the Consumer Financial Protection Bureau (CFPB) to ‘protect vulnerable seniors from reverse mortgage abuses.’
According to Consumers Union, its December 2010 report on reverse mortgages highlighted how borrowers can be ‘duped by misleading marketing claims and that required counseling provided by the Department of Housing and Urban Development (HUD) was inadequate.’ It also cited HUD statistics showing an increasing number of defaults on reverse mortgages because borrowers were unable to pay their property taxes or homeowner insurance premiums.
‘Reverse mortgages should only be used as a last resort because they can carry huge costs that can quickly drain a homeowner's equity,’ says Norma Garcia, senior attorney and manager of Consumers Union's financial services program. ‘The reverse mortgage industry insists that it can police itself, but it's clear we need common-sense oversight by the CFPB to protect seniors.’Â Â
Consumers Union is putting forward a number of recommendations for the CFPB to consider, including the establishment of a fiduciary responsibility for reverse mortgages and ‘stronger prohibitions’ on cross-promotional campaigns that include the product.