Fed issues alert on reverse mortgages
By Gary Linnell
ProWEB Wire (Industry News)
The Federal Reserve and other top regulators have teamed up in an effort to provide financial firms with guidance on how to avoid compliance and reputation risks related to reverse mortgages.
Reverse mortgages, which enable borrowers to get a monthly income stream by surrendering a portion of the equity in their homes, are likely to become increasingly popular given an expected rise in the elderly population.
According to a statement released by the Fed, "Reverse mortgages present substantial risks both to institutions and consumers; and, as with any type of loan that is secured by a consumer's home, it is crucial that consumers understand the terms of the product and the nature of their obligations."