An editorial piece from the New York Times takes issue with reverse mortgages and the proposal from the Federal Reserve to enhance consumer protections.
The author —who is anonymous but sounds a lot like AARP— writes that the Housing and Economic Recovery Act “law prohibited “cross selling,” in which lenders required reverse-mortgage borrowers to use some of the loan proceeds to buy other financial products, such as annuities or long-term care insurance policies, that in many instances made no sense for the borrowers.”
While the Fed’s proposal prohibits a creditor or broker from requiring consumers purchase another financial or insurance product as a condition for obtaining a reverse mortgage, a safe harbor is provided if the reverse mortgage transaction is consummated (or the account is opened) at least ten calendar days before the consumer purchases another financial or insurance product.
“As the AARP and other advocates have pointed out, the proposal is at odds with both the 2008 law and this year’s Dodd-Frank reform law, which requires the new Consumer Financial Protection Bureau to study and update the rules for protecting reverse-mortgage borrowers,” said the author.
Read the rest at the link below.