Reverse mortgages will be regulated
Sun, 05/09/2010 - 8:35pm
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Capitol Media Services
PHOENIX — Arizona is finally ready to start regulating reverse mortgages.
Gov. Jan Brewer has signed legislation to create the state’s first-ever oversight of the increasingly popular financial option for cash-poor seniors to be able to take some equity out of their homes without fear of becoming homeless.
Many homeowners already have some protections under federal law.
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I am aware of a lot of people getting hurt with Reverse Mortgages. They are
not always advised of the short-comings and after the fact they live longer
and end up not having a home in which to live. I advise people to be very
careful and know all the pit-falls of this procedure. I personally would not
take the chance.
It’s WAY too easy to get burned on these. Sadly, they tend to go after people
that cant read all the fine print or are told, “oh you don’t have to worry
about that, it’s just legal jargon”. They aren’t told that the lender expects
them to maintain their home, which can become physically or financially
difficult or the more than significant fees which these can trigger. Reverse
mortgages also tend to be more costly than most loans because they are
“rising-debt loans”. Basically, interest is compounded into the principal
loan balance each month. So, the total amount of interest owed increases
significantly with time as the interest compounds. There have been stories of
elderly couples getting these when one of them is in the hospital, appraisers
from a real estate company showing up measuring their house.