A legal microscope has been on the mortgage industry for the last three years. From toxic adjustable-rate mortgages to reverse mortgages for seniors, no home loan is safe from scrutiny. Government authorities are looking for ways to protect consumers and in Arizona, they’re stepping up to the mortgage plate to help seniors.
Arizona governor, Jan Brewer has just signed into legislation to create the state’s first ever oversight on reverse mortgages. Homeowners with reverse mortgages, most likely seniors and retirees, already have some protections under current federal law. However, this new state law will add more regulation and oversight on these home loans.
One of the problems associated with these loans are that they are not backed by federal insurance, but instead they are insured by the mortgage company that issues them. Since these mortgages have a tendency to be more expensive, and offer higher interest rates than other federally insured loans like FHA on Fannie Mae. The state of Arizona feels there needs to be some way to regulate them in order to protect consumers.
When there is very little regulation, borrowers are often left in the dark in regards to their mortgage terms and payback obligations. In addition, there appears to be a lot of heavy cross selling to seniors who attempt to obtain a reverse mortgage. Often, they are told by unscrupulous loan officers that they have to purchase some type of annuity or some sort of investment in order to get these loans. This is completely false.
This new law will protect Arizonians from these types of inaccurate statements. Hopefully, with properly educated consumers and clear disclosures, borrowers will have a clear understanding of the mortgage that they’re signing.