One of the worst things to happen to the mortgage industry was the subprime mortgage bust. People who thought that they were living the American Dream of home ownership ended up in financial trouble and the entire nation was affected. The worst of the problem seems to be over but the mortgage market is still suffering from its effects. And now some people fear that the bad lenders who were making trouble with subprime mortgages are entering the reverse mortgage market and planning to prey on senior home owners.
Seniors looking for help from reverse mortgages could be easy prey for some very misleading marketing or high-pressure sales tactics from those selling investment and insurance products. The National Reverse Mortgage Lenders Association recently has seen "subprime players coming into our market," warns association President Peter Bell. He also says these speculators are really "fringe players," not legitimate members of the reverse mortgage industry. (source)
This is definitely something that causes concern for the reverse mortgage industry and for people concerned about seniors becoming victims of crime. However it should be noted that the public and the government are both more aware of the risks of bad lending now as a direct result of the problems experienced with the subprime mortgage bust. This means that there is a lot more caution and monitoring in the industry which should limit any damages caused by subprime mortgage lenders trying to enter the reverse mortgage market.
Question of the Day: Are subprime mortgage lenders causing problems in the reverse mortgage market?
