by KYW's Salil Gutt
One sector of the mortgage business is still flourishing. The sale of reverse mortgages to seniors. The New York Times reported reverse mortgages have grown into a $20 billion industry with some 132,000 such loans written in 2007.
Reverse mortgages allow people over age 61 to borrow against the equity in their homes. The loan plus the accrued interest only has to be repaid if the owner moves or dies.
There is no doubt that access to the money from reverse mortgages has dramatically improved the lives of many seniors. But this is a complicated financial product and many seniors are getting snared by sales people who are aggressively pushing additional financial products as a use for this money. As a result, litigation against reverse mortgage sellers has increased. The heart of almost all litigation is when seniors are coerced into buying annuities with the money received from the reverse mortgage.
Annuities are a high expense-high commission item that locks in the buyer for ten years or so. If you are facing such a decision just say no.
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