Reverse mortgage Truth Lending disclosure

The Truth in Lending Act

The Consumer Financial Protection Bureau is planning stronger disclosure requirements for reverse mortgages as more evidence emerges that senior citizens are using the product without fully understanding its main features and risks.

As part of a Dodd-Frank Act requirement, the agency was set to release a study Thursday showing signs reverse mortgages are not being used as intended, with increasingly younger borrowers taking out larger pots of money rather than gradual income streams to help finance their later years.

"Though many older Americans are aware of reverse mortgages, they struggle greatly to understand this complicated product and the tradeoffs involved, " CFPB Director Richard Cordray said Wednesday in a conference call with reporters. "They may focus primarily on the amount of money they can garner in the short term, and underestimate the long-term costs and risks."

The bureau, which is required to study the reverse mortgage sector and identify potential consumer protection concerns, found that 73% of borrowers last year accessed nearly all or almost all of their home equity available in the reverse mortgage — an increase of 30 percentage points since 2008 — leaving few funds available later in life.

Nearly half of borrowers were younger than 70, and taking out a loan at the earliest eligibility (typically age 62) has become more common. The study found the biggest players in reverse mortgages currently are nonbanks, and the sector is "increasingly dominated by small originators." The two largest providers, Wells Fargo and Bank of America, left the market last year and MetLife left it in April.

"With their departure, the market has become much more heavily dependent on mortgage brokers and small correspondent lenders, " the study said.

Cordray said borrowers who use up all of their home equity earlier may lack the resources later on to pay off taxes and insurance related to their home. "The reverse mortgage product can provide some peace of mind not afforded by other types of loans, " he said. "Notably, however, the borrower still remains responsible for paying property taxes and homeowner's insurance which can cause real problems, including loss of the home if plans are not in place to continue meeting those obligations each year."

Less sanctimonious take on EU crisis

2011-07-07 15:04:36 by Tek_Jansen

Spain has received most of the attention, thanks to its ten-million strong turnout – reportedly half the entire labor force. Holding its first general strike since 2002, Spanish labor protested against its socialist government using the bank crisis (stemming from bad real estate loans and negative mortgage equity, not high labor costs) as an opportunity to change the laws to enable companies and government bodies to fire workers at will, and to scale back their pensions and public social spending in order to pay the banks more. Portugal is doing the same, and it looks like Ireland will follow suit – all this in the countries whose banks have been the most irresponsible lenders

You might also like:

Changes to the Truth in Lending Act and …
Changes to the Truth in Lending Act and …
Mortgage Truth In Lending
Mortgage Truth In Lending

CFPB releases new mortgage disclosure forms, rule  — Lexology
The rule applies to most closed-end consumer mortgages; home equity lines of credit and reverse mortgages are not covered. The new rule – which runs to 1,888 pages – was ..

CFPB releases new integrated mortgage disclosure forms  — Lexology
The CFPB has issued a final rule that will require lenders to use new disclosure forms that replace the home mortgage loan application and loan closing disclosures required under the Truth in Lending Act (“TILA”) and the Real Estate Settlement ..

Lions Pride Publishing Co., LLC Reverse Mortgage - Reverse Mortgage Dangers
eBooks (Lions Pride Publishing Co., LLC)
Wiley Reverse Mortgages and Linked Securities: The Complete Guide to Risk, Pricing, and Regulation (Wiley Finance)
Book (Wiley)
Who's to blame? Many answers, few certainties.(On the Road)(Securities Industry and Financial Markets Association)(National Reverse Mortgage Lenders ... notes): An article from: Mortgage Banking
Book (Mortgage Bankers Association of America)
Nuts and bolts of reverse-mortgage lending: borrowers, lenders, servicers and buyers of reverse-mortgage loans face a complex set of challenges if ... Trends): An article from: Mortgage Banking
Book (Thomson Gale)

Related posts:

  • Avatar Andre A I don't qualify for a refinance, my rate is adjusting up. Can anybody help me? or should i just foreclose?
    Jun 12, 2008 by Andre A | Posted in Renting & Real Estate

    My home is in california and I am currently upside down on it. The rate on my 1st mortgage is due to adjust soon. I don t qualify for a refinance because i ve been late a few times. Should i just stop making payments on the home? My rate is adjusting to around 9% next month. If the home was a little more affordable I could manage but this is currently not the case. Are there any option other than refinancing? Please help.

    • Be very careful about choosing the forclosure route. This will be on you credit report for 7 years--that s a long time. So here are some options: 1) Talk to your bank. See if they ll freeze your interest rate . Even if only for a year or so. 2) If you have decent credit see if you can get an outside loan to pay the difference between what you owe and what the bank will lend. If you must come to the table to refinance--this might be worth it. Find an ethical mortgage broker who will reduce his/her fee to enable you to close your new loan w/o bring a lot to closing. Be very careful about …