Reverse mortgage misconceptions: SEQUAL

Industry body the Senior Australian Equity Release Association of Lenders (SEQUAL) has voiced its concerns that myths and misinformation surrounding reverse mortgages and equity release products is stopping retirees from enjoying a more comfortable lifestyle.

Executive director of SEQUAL, Kieren Dell, said that with the booming proportion of the population entering their 60s the equity stored in the home may be critical to funding retirement. Yet, many retirees would rather live poor than use part of the equity to fund a better lifestyle because of their false fears and misconceptions of reverse mortgages.

Some of the concerns spelled out by SEQUAL include:

• Home ownership issues - many believe they will lose ownership of their homes when taking out a reverse mortgage.


• Loss of capital growth - some believe that they will not be entitled to the appreciation in their homes upon getting a reverse mortgage.

SEQUAL wants to dispel these myths and let homeowners understand that a reverse mortgage is simple a loan against the home and the homeowner retains complete ownership of their home.

There are many myths surrounding reverse mortgages in the retirement community, but provided you deal with a reputable lender who is a member of SEQUAL, fear of these myths should not stop retirees from using these products in the right circumstances, Dell said.

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Better Business Bureau warns of Reverse Mortgage Scams

The Better Business Bureau is urging homeowners in financial trouble to explore their options before signing papers transferring their deed to a third party or signing up for what they believe is a reverse mortgage application.

All Better Business Bureaus in the U.S. and Canada are issuing an international alert to help combat the growing incidences of real estate fraud, the local office said Tuesday in a news release.

Its understandable that people panic when facing the loss of their home, said Michael Coil, northeastern Indiana president and chief executive. Yet this is a situation that calls for clear-headed thinking. The BBB urges homeowners who are in financial distress to explore every alternative to keeping their home and falling victim to easy solutions.

Some scams can lead to consumers losing their homes and all the equity they had in it. Their best first step is to talk to their mortgage lender, the local office said. If a repayment schedule can't be worked out, they should consider hiring a real estate agent and selling the house to pay off the debt, the release said.