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CONSUMER ADVISORY | JUNE 2015

Don’t be misled by reverse 

mortgage advertising 

You might see enticing images of 

youthful retirees on the golf course 

or enjoying other leisure activities in 

a reverse mortgage advertisement. 

A reverse mortgage is a special type of loan that 

allows homeowners 62 and older to borrow against 

the accrued equity in their homes. The loan must 

be paid back when the borrower dies, moves, or no 

longer lives in the home. 

Ads for reverse mortgages are found on television, 

radio, in print, and on the internet, and many ads 

feature celebrity spokespeople discussing the 

benefits of reverse mortgages without mentioning 

risks. We looked closely at many ads and found 

incomplete and inaccurate statements used 

to describe the loans. In addition, most of the 

important loan requirements were often buried in 

fine print if they were even mentioned at all. These 

advertisements may leave older homeowners 

with the false impression that reverse mortgage 

loans are a risk-free solution to financial gaps in 

retirement. 

In conducting our study, we met with older 

homeowners in Washington DC, Chicago, and 

Los Angeles to learn about their thoughts and 

impressions of reverse mortgage ads. After looking 

at a variety of ads, many homeowners we spoke 

to didn’t realize reverse mortgage loans need 

to be repaid. Instead, some thought they could 

access their equity interest-free, or that the federal 

government provided the money as a benefit 

to seniors. Homeowners told us that the most 

attractive messages in the ads were “you can live 

in your home as long as you want,” and that you 

“still own your home.” Many ads, however, didn’t 

mention that seniors could lose their homes if they 

don’t satisfy the loan requirements, such as paying 

property taxes or homeowners insurance. 

Seniors said the ads made reverse mortgages look 

like a good way to travel and enjoy retirement while 

they were still young and active. Yet Americans are 

living longer, more active lives than ever before. 

Reverse mortgage borrowers can outlive their loan 

funds by borrowing without careful planning. 
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Reverse mortgage ads don’t 

always tell the whole story, so 

consider these facts when you 

see advertisements:

1. A reverse mortgage is a home loan, 

not a government benefit. 

Reverse mortgages have fees and compounding 

interest that must be repaid, just like other home 

loans. With most reverse mortgages, federal 

insurance guarantees that borrowers will receive 

their loan funds if their lender has financial difficulty 

or if their loan balance exceeds the value of their 

home. However, borrowers pay for this insurance 

and it’s not a government benefit.

2. You can lose your home with a 

reverse mortgage. 

When a reverse mortgage ad says you’ll retain 

ownership of your home, or that you can live there 

as long as you want to, don’t take these messages 

at face value. These statements are true only if you 

continue to meet all requirements of the reverse 

mortgage. If you fall behind on your property taxes 

or homeowners insurance, are absent from your 

home for longer than six months, or fail to satisfy 

other requirements, you can trigger a loan default. If 

you don’t take care of the default in time, the lender 

can foreclose on your home. Sometimes these 

requirements are listed in fine print, but not always. 

If you have a question about reverse mortgage 

requirements, visit portal.hud.gov to contact a 

HUD-approved housing counselor near you. 

3. Without a good plan, you could 

outlive your loan money.

After seeing a reverse mortgage ad, you might think 

that a reverse mortgage guarantees your financial 

security no matter how long you live. Americans are 

living longer today than they were just a generation 

ago. Make sure you have a financial plan in place 

that accounts for a long life. That way if you need to 

tap your home equity, you won’t do it too early and 

risk running out of retirement resources later in life. 

Questions about reverse mortgages?

You can check out consumerfinance.gov/askcfpb 

and search for your question or click the button that 

says “mortgages.” 

If you have a problem with your 

reverse mortgage

If you’re having a problem with your reverse 

mortgage or having problems getting 

through to your mortgage servicer, you can 

submit a complaint to us.

 Online

consumerfinance.gov/complaint

 By phone

Toll free: (855) 411-CFPB (2372) 

TTY/TDD : (855) 729-CFPB (2372)

8 a.m. to 8 p.m. Eastern Time,

Monday-Friday

 By fax

(855) 237-2392

 By mail

Consumer Financial Protection Bureau

P.O. Box 4503

Iowa City, Iowa 52244