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Re-activateMany of the same players who fueled the subprime mortgage boom have migrated to the reverse mortgage market, which is viewed by lenders as a source of profits that have dried up elsewhere. Predators who once reaped their rewards from exotic loans are now focused on wresting wealth from vulnerable seniors, the report concludes.
"We've seen this movie before and it didn't have a pretty ending," said Sen. Claire McCaskill at a news conference announcing the release of the new report. "Abuses in the subprime lending market almost brought down our economy. Now we're seeing similar abuses with reverse mortgage lending—something needs to be done before more lifesavings are depleted and more tax dollars are drained." McCaskill plans to introduce new federal legislation to improve government oversight of reverse mortgages and further strengthen consumer protections.
Sadly, reforms will come too late to help Ernest Minor, a Marysville, Calif. senior who was featured in our story because he is facing foreclosure as a result of taking out a reverse mortgage. According to this local press account, Minor and his family are about to join the ranks of the homeless if they are evicted as they anticipate on Oct. 15.
More than 110,000 federally-backed reverse mortgages worth a total $17 billion are originated annually. The number one lender in that market is Wells Fargo Bank, followed by Bank of America, which enjoyed a 37-percent increase in reverse mortgage sales volume for the 12 months ending Sept. 30, a record year for the reverse mortgage industry, according to industry trade publications.–Andrea Rock
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