By Staff
LANSING – If you are in your 60s and own your home, chances are you have heard about reverse mortgages.
Reverse mortgages can be helpful to homeowners who want to stay in their homes but are having trouble keeping up with their mortgage payments, or who need additional funds to fix up their house or pay for services.
But, there is a new twist on the sales pitches for reverse mortgages – seniors are being urged to take out a reverse mortgage to buy risky investments.
This sales practice has recently cropped up in Michigan.
If you are 60 years of age or older, you can arrange for a loan called a reverse mortgage, or home equity conversion loan.
These loans can be paid out in monthly installments or in a lump sum. The loan comes due when you vacate your home.
Unlike traditional mortgages, whose loan balances get smaller, reverse mortgage debt gets bigger over time.
Self-described estate planners in Michigan are luring older people into "free lunch" seminars at which participants are encouraged to take out reverse mortgages on their homes and to use the proceeds from the reverse mortgages to purchase annuities.
A formal complaint about these "free lunch" seminars has been made to Michigan Attorney General Mike Cox.
"My office will go after those who target seniors and threaten a lifetime of hard work and savings," Cox said. "Michigan's seniors have paid their dues; they shouldn't have to worry about losing their life's savings."
In early March, the Financial Industry Regulatory Authority (FINRA) issued an investor alert urging homeowners over the age of 60 to carefully weigh their options before tapping into their home equity via a reverse mortgage to obtain additional income for their retirement years.
Comment by the AARP.