Beware of Reverse Mortgages

The United States is currently in a economic downturn of the worst kind. Irresponsible business practices on Wall Street and the predatory, aggressive mortgage practices that put people in mortgages they could not afford are certainly a substantial contributing factor to our economic problems. Predatory lending is a general term that is used to describe irresponsible lending practices, and can take many forms, from mortgages to consumer lending. At Coxwell & Associates we have been actively engaged in representing people who have been the victims of predatory lending. This type of legal work is very hard for several reasons. First, banks and lending institutions have lobbyists and enough money to spend to keep Legislators from passing consumer protection laws. Second, predatory lending often occurs to people in the lower income, and in my experience there is never a great rush or demand to protect or help low income people. Mississippi has traditionally been an agricultural state and in the past power was centered in the land owning class.

There was an article in the paper recently exposing a troublesome form of predatory lending. This lending practice is called reverse mortgages. The reverse mortgage is aggressively promoted to seniors, people over 62 who own a home and have substantial equity. According to the article, seniors can borrow money on their home and they are not required to pay back the money until the die or move out of their house for more than a year. The mortgages have high up from costs and high interest rates. Because no payments are made the interest quickly compounds and can take away a senior’s entire equity. One example was of a senior who borrowed about $120,000 and ended up owing $610,000.00. People have the right to dispose of their property but before our seniors are subjected to aggressive reverse mortgages there should be laws to make sure they are fully informed of all the consequences. We don’t need another mortgage crises.

Frank coxwell is a member of Coxwell & Associates who focuses on consumer bankruptcy and predatory lending. Frank files hundreds of bankruptcies for people each year. He is a frequent speaker on consumer issues. for a free consultation call 601-948-1600.

Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.

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