A U.S. financial regulator warned that new rules may be needed to address hidden dangers in reverse mortgages, the special loans that enable cash-strapped borrowers to draw against the equity in their homes, the Wall Street Journal reported today. Deceptive marketing practices, complicated loan terms and misleading marketing materials are some of the problems the Consumer Financial Protection Bureau (CFPB) highlighted in the $90 billion industry, which is expected to grow in popularity as tens of millions of baby-boomer homeowners grow older and struggle to pay for retirement. Nearly 10 percent of reverse-mortgage borrowers are at risk of foreclosure because they have failed to pay taxes and insurance, according to the CFPB's study, mandated by the 2010 Dodd-Frank financial overhaul. The loans represent a small corner of the national mortgage market, with only about 2% to 3% of eligible households using them, according to the CFPB. But studies show demand is growing, expanding the pool of 580,000 currently outstanding, according to Reverse Market Insight, a data provider and newsletter on the industry.
