In a radio show segment interviewing representatives of AARP and the Consumer Financial Protection Bureau, Texas Public Radio this week took a close look into reverse mortgages.
The half-hour segment on TPR’s “The Source” delved into loan options, cautions and recent product changes to make the loans safer for borrowers while gaining perspective from Dr. Lori Trawinski from the AARP’s Public Policy Institute and Nora Eisenhower, assistant director of the Office of Older Americans at the CFPB.
The guests advised caution, in particular for borrowers in response to advertising for reverse mortgages.
“They make it seem so easy,” Trawinski said of the advertising. “I’m sure for some people, this does work out and it’s great. But it’s over-simplified [in the ads].”
The CFPB is also looking into advertisements after finding recently that 25 times more money is spent on advertising for financial products than on education of consumers as to how the products work.
“Some of the reverse mortgage ads highlight a luxury lifestyle to those who may be short on cash,” Eisenhower said. “[They present] easy access to enhance lifestyle in retirement. It’s a rather expensive loan product. [It can be] good designed as a bridge for income gaps, not a one-off solution. It’s part of a whole plan for later life security. I don’t think that comes through in the commercials.”
The guests also pointed to cautions around non-borrowing spouses, advising borrowers to take the loan in both spouses names, when a couple owns the home.
“If you are living together, borrow together,” Eisenhower said, adding an additional word of caution. “This is a piece of a puzzle. There are implications for sale of home and family members. [Counseling] is the tip of the iceberg in terms of indicating how complicated this product is.”
Written by Elizabeth Ecker