Consumers Union today called on the Consumer Financial Protection Bureau to promote stricter oversight of reverse mortgages, timed with a public reverse mortgage hearing scheduled by the CFPB for June 27, as well as a national public education campaign launched by the industry last week.
“Reverse mortgages should only be used as a last resort because they can carry huge costs that can quickly drain a homeowners equity,” said 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.”
The organization cites a report it conducted in December 2010 on reverse mortgages as driving the need for stronger oversight by the consumer protection agency.
Among the specific protections Consumers Union calls for: Ensure loans are suitable for borrowers; establish a fiduciary responsibility for the loan; outlaw deceptive marketing; adopt stronger prohibitions on cross promotions; strengthen the quality and content of counseling; and protect non-borrowing spouses and tenants.
Consumers Union is the policy and action arm affiliated with Consumer Reports.
Written by Elizabeth Ecker