Borrowers unaware of reverse mortgage pitfalls

Staff Reporter Thursday, 22 Nov 2007 1 minute read

The majority of borrowers that have taken out a reverse mortgage were not fully informed about the conditions of their loan, a report issued yesterday by ASIC said.

“Many of those ASIC spoke to did not know how much the loan was likely to cost them over time, and more than half did not know what would happen if they breached a loan condition,” said ASIC executive director of consumer protection Greg Tanzer.

“Most people did not have tailored projections about the likely long-term cost of a reverse mortgage,” he said.

Despite these concerns the report did not find any reverse mortgages in default and all seniors surveyed found their reverse mortgage experience “satisfactory” or better.

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