I have always had a concern about these "vehicles" and now that money has gotten tighter and tighter when 401K's and other retirement plans have gone the way of GM the Calif. Assoc. of Realtors is piping up too!! Read the following and pay close attention to the warnings in the coming weeks.
C.A.R. Mortgage Update
This week’s C.A.R. Mortgage Update contains information about reverse mortgages, mortgage rates, mortgage re-fis, loan modifications, an increase in the number of prime mortgage defaults, the FDIC’s plan to postpone the initial sale of bank assets, and a new loan for seniors.
U.S. regulator: Be wary of reverse mortgages
Some industry analysts, including U.S. bank regulator, John Dugan, believe that reverse mortgages could be the next subprime mortgage product to gain traction. Dugan says that while reverse mortgages can be beneficial, they also share some of the characteristics of the riskiest types of subprime mortgages.
Although the majority of reverse mortgages is insured by the Federal Housing Administration and poses limited credit risk, a different class of reverse mortgages is becoming popular--“proprietary” products--which offer less consumer protection.
To protect consumers, regulators are crafting guidelines and Dugan is recommending that regulators be more vigilant about misleading marketing and cracking down on lenders who try to bundle a reverse mortgage with other financial products, such as an annuity or life insurance product
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