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Authorizing a full and comprehensive investigatory public hearing by Council's Committee on Finance on the impact reverse mortgage lending products are having on residents in the City of Philadelphia. Specifically, the public hearings will seek to determine the extent and impact such lending products have on the City's senior citizen homeowners, and the potential intergovernmental remedies that can be developed to protect consumers from any unintentional harms that may result from acquiring this type of lending product.
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WHEREAS, According to the Consumer Financial Protection Bureau (CFPB): "A reverse mortgage is a special type of home equity loan for older homeowners that requires no monthly mortgage payments. Borrowers are still responsible for property taxes and homeowner's insurance. Reverse mortgages allow seniors to access the equity they have built up in their homes now, and defer payment of the loan until they die, sell, or move out of the home. These loans are called 'reverse' mortgages because in many ways they function 'in reverse' as compared to the traditional 'forward' mortgages most homeowners use to purchase their homes"; and
WHEREAS, As a condition of a reverse mortgage loan, borrowers are required to live in the home as their principal residence, pay property taxes and insurance, and maintain the property in good repair; and
WHEREAS, If the borrower either moves out for more than 12 months, fails to pay property taxes or maintain current homeowner's insurance, or fails to maintain the home in good repair, the lender can then demand that the borrower immediately cure the default and, after proper notice, can proceed to foreclose on the home; and
WHEREAS, In June 2009, U.S. Comptroller of the Currency John C. Dugan went before a gathering of bankers and warned of a danger growing in a market designed to serve the nation's seniors: "While reverse mortgages can provide real benefit, they also have some of the same characteristics ...
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