borrower

The court of appeal said “burying such a statement in the small print which the lender knows the borrower is highly unlikely to read will not suffice”.

This is for older homeowners who want to leverage the value of their home without having to sell it—the mortgage company takes a lien and pays out the borrower in regular installments.

If the borrower only lives a year or two after obtaining the reverse mortgage, there would likely still be equity in the home.

But, Pratt says, if the borrower gets the loan at 70 and lives to, say, 120 collecting payments the entire time, the mortgage company takes the loss.

When that first home sells a few weeks later and the borrower has $300,000 in cash, they can pay that on their existing mortgage, making the new loan amount $500,000.