Proposed lending changes alleged to harm elderly

The Center for Responsible Lending, the National Consumer Law Center, National Association of Consumer Advocates, California Reinvestment Coalition, National Fair Housing Alliance and others are asking the Federal Reserve Board to withdraw the proposed changes.

The groups say that proposed changes regarding reverse mortgages would harm senior citizens. One of their complaints is that lenders would be allowed to sell unnecessary financial products to seniors when they market reverse mortgages. Reverse mortgages allow seniors to borrow monthly against the equity in their homes and delay repayment of the loan until the homes are sold.

Another complaint is that advertisers of reverse mortgages would be allowed to make false statements, such as "you can never lose your home," as long as they present additional information.

The groups allege that the rule changes would open the door to a harmful new type of reverse mortgage where a borrower could owe much more than a home is worth. Currently a borrower cannot owe more than what can be gotten by selling the house.