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Your parents worked hard for their money. Good advisors work hard to protect it. What often can bother children faced with administering their parent's estates are the unanswered questions surrounding a reverse mortgage on their parent's house.
It is not uncommon that heirs or trust beneficiaries first learn of their parent's reverse mortgage soon after their parent's passing. The documentation for reverse mortgages may be baffling at first glance - and for that matter, even after a careful review. The Consumer Financial Protection Bureau (CFPB) goes so far as to say that reverse mortgages are "complex products and difficult for consumers to understand," especially in light of "misleading advertising," low-quality counseling, and "risk of fraud and other scams."
Well we've had many clients who would add their voice seconding what the CFPB's cautions. While experiences vary many children find the existence of the reverse mortgage a bad surprise and alarming evidence of their parent's financial struggles. Digging a little deeper surviving children may find that bigger questions loom as to what happened to the money borrowed in the reverse mortgage. Is it any wonder that survivors sometimes find that a mortgage broker, sibling, or other relative unduly influenced a vulnerable elder to borrow money that he or she didn't need? And, that upon the borrowing big commissions were paid and moneys transferred or made available to a non-working alcoholic or substance-abusing child.
Let's be clear. Not all reverse mortgages end up with nefarious distributions by unduly influenced elders - but enough of these transactions are tainted by wrongdoing that additional protections for seniors should be sought. In the meantime, we who work to protect wronged heirs and abused trust beneficiaries have seen enough real life circumstances that substantiate the credibility of the CFPB's warnings.
Reverse mortgages are complex products and difficult for consumers to understand. They are often sold with misleading advertising. Such advertising may be coupled with high-pressure, forceful and intense sales tactics. The elder borrowers get low-quality counseling, and the mortgages can carry the "risk of fraud and other scams."
Now, if you're trying to figure out what happened in your parent's reverse mortgage and something just doesn't smell right, call us at Hackard Law. We'll be happy to talk with you and find the best way forward. We can be reached at (916) 313-3030.