Mortgage

The SEC put a stop to a $50 million real estate focused Ponzi scheme that targeted elderly investors in the Detroit area. John Bravata and Richard Trabulsy apparently lured more than 400 elderly investors with the promise of safe 8% - 12% returns. Many of the investors were solicited with " free lunch " seminars. The reality of the situation, however, was very different than what was promised: The men “lied” to prospective investors about the use of funds and spent $7.2 million...

The Center for Retirement Research at Boston College has just released a research brief that addresses whether it makes sense for retirees to carry a mortgage into their retirement years. Many retirees (20%) have a mortgage and also have adequate resources to pay-off that mortgage. The question is whether it makes financial sense to do so. The research brief concludes that it makes sense to pay-off the mortgage unless : the household can earn a risk-free return that exceeds the mortgage...

The cross-selling of annuities and reverse mortgages is problematic to say the least. There is clear potential for conflict of interest and pitfalls for elderly customers. Consumers should be on the look-out for any sales pitch that ties the two products together. There are, in fact, laws that define the need for separation of the two products during the marketing and sales process: Under the Housing and Economic Recovery Act of 2008, a lender or anyone else can’t require a HECM (a...