The recently announced reforms to reverse mortgages (as part of phase two of the NCCP) are to be applauded.
By mandating that lenders provide a ‘No Negative Equity Guarantee’, all seniors can now feel comfortable that reverse mortgages are safe. And by also ensuring that intermediaries such as brokers provide better disclosure of the possible financial consequences of entering into these types of contracts (by way of equity projections using recognised reverse mortgage calculators) the government has also helped seniors better assess how accessing credit can reduce their equity in their home and limit their choices in the future.
However, it must be said that members of SEQUAL have been providing these protections and following these processes for years, and have an extremely low customer complaint ratio to show for it. It is a testament to SEQUAL that the government has adopted these ideas.
What these reforms won’t stop however, is a small number of seniors being incorrectly sold a ‘reverse mortgage’ when in fact the loan they are being offered is not a true reverse mortgage, but a ‘line of credit’ or ‘low doc’ that affords none of the protections listed above.
SEQUAL approach a winner for reverse mortgage reforms
by Darren Moffatt on August 10, 2011
The recently announced reforms to reverse mortgages (as part of phase two of the NCCP) are to be applauded.
By mandating that lenders provide a ‘No Negative Equity Guarantee’, all seniors can now feel comfortable that reverse mortgages are safe. And by also ensuring that intermediaries such as brokers provide better disclosure of the possible financial consequences of entering into these types of contracts (by way of equity projections using recognised reverse mortgage calculators) the government has also helped seniors better assess how accessing credit can reduce their equity in their home and limit their choices in the future.
However, it must be said that members of SEQUAL have been providing these protections and following these processes for years, and have an extremely low customer complaint ratio to show for it. It is a testament to SEQUAL that the government has adopted these ideas.
What these reforms won’t stop however, is a small number of seniors being incorrectly sold a ‘reverse mortgage’ when in fact the loan they are being offered is not a true reverse mortgage, but a ‘line of credit’ or ‘low doc’ that affords none of the protections listed above.
If you are unsure about the loan you have, email me at info@seniorsfirst.com.au
Darren