Baby boomers are coming up short on retirement savings, but most of them have a key asset they bring to their later years: their homes.
Tapping that asset in the form of a reverse mortgage is becoming a popular way for seniors to generate income after they stop working, and reforms in recent years have reduced or eliminated many of the problems these loans presented in the past. While loan volume has declined slightly in recent months, seniors still have about 628,000 of the loans outstanding, roughly 1 percent of the overall mortgage market, according to the Consumer Financial Protection Bureau (CFPB).
But problems persist with reverse mortgages, not least in how the loans are advertised, and on Thursday the CFPB highlighted some of those shortcomings in a new study describing the results of a reverse mortgage focus group.
"The ads left the consumers believing that if they purchase a reverse mortgage loan, they will be able to rest assured that they can live in their homes and enjoy financial security for the rest of their lives," said CFPB Director Richard Cordray in prepared remarks. "Incomplete or inaccurate information in an ad can cause older Americans to make the wrong choice that jeopardizes their financial security. They could run out of money for their day-to-day expenses or they could even lose their homes."