26th Jan 2015

The scam artists are relentless — advising seniors to take out reverse mortgages in order to buy equity indexed annuities.  The pitches are fairly predictable — promises of high returns, flexibility on accessing cash value, and safety.  For years I have been studying and litigating over annuity, but looking at the print-out and closing statement on the recently sold residence of an 84 year old Floridian was a new one for me.  In fact, I was shocked at how little equity remained in his home given the net check he received when he deeded over his property.  It was clear that the senior did not understand the loan and frankly I could not be of much help in analyzing the mortgage lien. But what I could see was that he had probably been taken on the reverse mortgage and was about to be taken again on the purchase of an annuity.  First of all, the proceeds he received from selling his home made no sense in light of the short duration of the reverse mortgage.  And second, he was about to take the proceeds, move in with his daughter, and purchase an equity indexed annuity with a punitive deferral provision well buried in the policy mumbo-jumbo.  Had it not been for the intervention of his daughter, there would have been a financial disaster of the type I have so often seen in Florida.

My quick advice:  If you are, or think that you are, a candidate for a reverse mortgage, do your research and seek out a reputable lender.  Avoid high pressure sales tactics and run away quickly from promises of “free money.” And most importantly, do not buy an equity indexed annuity.

Comments (1)

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