July 31, 2008

McCaskill Reverse Mortgage Protections Become Law

Measure included in housing bill will protect seniors

WASHINGTON, D.C. – A provision sponsored by U.S. Senator Claire McCaskill aimed at protecting seniors from aggressive marketing and predatory lending amid the rapid growth of the reverse mortgage industry was signed into law this week as part of the Housing and Economic Recovery Act of 2008.  Reverse mortgages are financial tools designed to give homeowners access to the equity in their home, and are often marketed to seniors faced with diminishing retirement funds. However, this industry is often fraught with aggressive marketing techniques and predatory lenders looking to take advantage of vulnerable borrowers.  

“This law will help protect seniors in this country who often fall prey to aggressive marketing techniques and predatory sales pitches,” McCaskill said. “For many people, reverse mortgages are a great financial tool but we need to make sure people who are buying them are getting the information they need to make sound financial decisions and they aren’t being taken advantage of by salespeople looking to make a quick buck. I’m pleased that my colleagues in the Senate have joined me on this measure and with the President’s signature we can move forward in making sure the reverse mortgage industry doesn’t turn into the next subprime mortgage mess.”

McCaskill’s amendment, which strengthens and builds upon legislation she introduced in December, was added to the Foreclosure Prevention Act of 2008. The provision was the result of a hearing McCaskill chaired late last year before the Senate Special Committee on Aging to look at abuse in the reverse mortgage industry.