A United States Senate committee looking at potential problems in the reverse mortgage industry holds a hearing today in University City.
Committee chairman Claire McCaskill says reverse mortgages can be a good tool for some people in limited circumstances. But they’re expensive and not right for many senior citizens. But she says they’re being marketed heavily to senior citizens because the federal government backs them and they can become predatory lending operations. She says a home equity loan is much less expensive and can be utilized in the same way in many cases.
She says the biggest problem is that people do not realize how expensive reverse mortgages are and that sometimes salesmen also market annuities as part of their pitch. McCaskill is not sure that’s ethical or moral.
The committee will hear from representatives of the industry as well as from those who investigate its shortcomings.