WASHINGTON, Dec. 9, 2010 /PRNewswire/ -- Reverse mortgages help seniors stay in their homes while maintaining their dignity and financial independence, and provide them with the flexibility to use their built-up home equity while preserving their other resources to cover unexpected emergency expenses without depleting their savings or bankrupting them, say senior advocacy groups and reverse mortgage industry leaders.
A report released on December 8 by Consumers Union and other special interest groups claims that federally insured reverse mortgages are not financially viable tools for seniors and cautions seniors from using reverse mortgages. The report is based on dated information and does not take into account pro-consumer reforms adopted by the industry and distorts loan information to scare consumers and seniors about the highly successful reverse mortgage program that earns high marks in customer satisfaction.
"Seniors should know that reverse mortgages are sound economic tools that allow them to leverage their own wealth to continue to support themselves and live in their homes longer. The Consumers Union report does a disservice to seniors by repeating myths about the program. The reality is, the reverse mortgage program is government-backed and heavily regulated by FHA to protect consumers and their interests," said Jeff Lewis of the Coalition for Independent Seniors. "It simply is not fair to say that 26 instances of questionable practices among over 2000 lenders nation-wide is reason not to explore reverse mortgages to help you meet your financial needs."
Thair Phillips, President of RetireSafe, a 400,000-supporter strong national advocacy group for older Americans, believes that reverse mortgages are an important option for seniors. He said, "Having a financial option that allows seniors to remain in their homes is a godsend to our members who have obtained reverse mortgages in these troubled financial times. Seniors don't want to depend on the government but would rather use the equity they worked so hard to build up in their homes as a way to remain in their home and continue their older years in dignity."
The Consumers Union report relies heavily on outdated information that has appeared in previous Consumers Union reports and does not take into account the consumer protections adopted by the industry in recent years, including: a law banning cross selling of additional financial products; stronger requirements for financial counseling; regulations against deceptive advertising; and consumer protections that prevent Seniors from losing their homes.
The federally backed Home Equity Conversion Mortgage (HECM) program is administered by the Federal Housing Authority (FHA). FHA works tirelessly to ensure that the HECM program is a "break even" for the taxpayer and also ensures that adequate consumer protections are in place. As a result, FHA has developed HECM products that provide more consumer protections and more economic value to the borrower than any similar products offered in the private sector.
Seniors are satisfied with the program, their loans and their lenders. An AARP report in 2007 found that only 3% of reverse mortgage lenders were dissatisfied with their loans.
"We have a good product, seniors like it and it benefits the seniors, their families and society as a whole," said Lewis. "Consumers Union didn't talk with lenders or borrowers before issuing this report. If they had they'd hear what we hear from seniors – that the program has given them the financial independence they want and the ability to meet unexpected expenses and continue to live in their homes."
About The Coalition for Independent Seniors
The Coalition for Independent Seniors (CIS) is a non-partisan, non-political, public advocacy coalition dedicated to preserving independence, financial stability and economic security for seniors while protecting their ability to live financially independent lives.
To learn more about The Coalition for Independent Seniors, visit www.cforis.org
RetireSafe is a grassroots organization that advocates and educates on behalf of America's seniors on issues regarding Social Security, Medicare, health and financial well being. RetireSafe expects its government to keep its promises, protect our nation, and maintain the safety and personal freedoms of its citizens. For more visit www.retiresafe.org.
SOURCE Coalition for Independent Seniors