General World News

CFPB warns consumers about home equity contracts, comparing their features to reverse mortgages

The Consumer Financial Protection Bureau (CFPB) this month published an issue spotlight that takes a closer look at home equity contracts, or what the industry refers to as home equity investments (HEIs) that offer a lump sum payment to clients in exchange for a stake in their home equity.

At the time the contract is settled, the homeowner must pay a lump sum back to the provider, an amount that is also partially based on the home’s value.

But the HEI industry could carry a lot of risks for consumers, the bureau details ⇒

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