Consumer Reports is back cheering on Senator Clair McCaskill and her “mandated mission” to protect seniors from predatory lending abuses in the reverse mortgage market. McCaskill proposed an amendment to the Consumer Financial Protection bill being debated in the senate last week with Sen. Herb Kohl, chairman of the U.S. Senate Special Committee.
“While reverse mortgages are great for some seniors, too many of our Greatest Generation are being hoodwinked by misleading advertisements and predatory lenders looking to make a buck,” said McCaskill in a statement. “Because these are government-insured loans, the taxpayers are on the hook when they default. If we don’t put in place some better oversight measures, we‘re going to end up in a mess worse than we saw with the subprime lending collapse.”
The magazine published its “investigative report” on reverse mortgages last year which was anything but balanced. CR says the pitfalls seniors face from reverse mortgages were documented in a report from the National Consumer Law Center: “Subprime Revisited: How the Rise of the Reverse Mortgage Lending Industry Puts Older Homeowners at Risk.”
CR believes the amendment would go a long way toward providing additional protection for vulnerable seniors.
One would hope they would mention the costs of reverse mortgages continue to fall, but they decide to take a quick swipe at the industry’s decision to hire Chicago based public affairs company Golin Harris instead. CR editor Andrea Rock writes:
The proposal for tougher regulation comes at the same time that the industry trade publication National Mortgage News reports the National Reverse Lenders Association is preparing to launch a national campaign to promote a positive image for reverse mortgages, enlisting the help of a Chicago-based public affairs company that originally came up with the idea of using the now-iconic “golden arches” to distinguish McDonald’s and attract customers for its then 10-cent burgers.
We all know how that turned out. Whether these complex financial products can—or should—be pushed like fast food is, of course, another question entirely.