Sequal advises that money for living is not a reverse mortgage scheme

Media Clarification
30 April 2008

Senior Australian Equity Release Association of Lenders (SEQUAL®) advises the media that Money for Living was not involved in promoting or selling reverse mortgages.

The clarification comes after Money for Living director, Mr Gary O'Neill was sentenced on Monday after pleading guilty to two charges of dishonestly using his position. The charges were brought by the Australian Securities and Investments Commission (ASIC).

Money for Living's operations involved purchasing properties at a discounted rate and issuing lifetime tenancies to the vendor. The court found Money For Living made false and misleading statements in promoting the scheme and in its agreements with the vendors.

In comparison, reverse mortgages allow seniors who own their home to borrow against their home equity. Retirees maintain ownership of their home at all times. No repayments are required during the loan term with interest and fees rolled up into the loan balance. The total loan only becomes repayable when all borrowers have passed away, sold or permanently vacated their home. Funds loaned are typically limited to between 10% and 40% of the property's value, depending on the age of the youngest borrower.

According to the SEQUAL/RFI Its All on the House Study, 78% of over-60s had heard of reverse mortgages, but as little as 40% understood the basic premise of the product. In addition, many seniors had a poor understanding of how to financially plan for retirement.

The media play an important role in educating seniors. Reverse mortgages are a logical retirement financial planning tool. It is vital that media and consumers understand the difference between dishonest schemes, such as Money for Living, and mainstream reverse mortgages," says Kieren Dell, Executive Director, SEQUAL.

A not-for-profit association, SEQUAL aims to ensure the reverse mortgage market develops in a responsible and consumer conscious way by imposing a strict Code of Conduct on its Member lenders. The Code requires lenders to offer a 'No Negative Equity Guarantee', which ensures retirees can never owe more than the value of the home.

ENDS

For more information, please contact Allison Lee, IMPACT Communications Australia, Tel (02) 9519 5411/ Kieren Dell, SEQUAL, Tel: 0427 461 186

Sequal advises that money for living is not a reverse mortgage scheme

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