Warnings intensify on equity release as company fails
The placement of a Victorian vendor of equity release products into voluntary administration has intensified warnings to retirees to take extreme care before buying into one of the increasingly popular products.
Money For Living, which was promoted by actor Paul Cronin of The Sullivans fame and swimming legend Dawn Fraser, offered retirees either a lump sum payment or regular instalment payments in return for selling their home over to the company.
But now that the company has been placed into administration, investors could end up losing all instalment repayments, as well as their home.
Administrator George Georges of Ferrier Hodgson confirmed that at least 120 investors have already sold their homes over to Money For Living. He estimated that over half of these had been on-sold to third-party investors.
“[The Money for Living product] was not a reverse mortgage, it was a very different style of transaction,” said Bluestone equity chief executive, and reverse mortgage provider, Peter McGuiness.
“But for those people who do sign up to a reversion scheme where the house is sold up-front, getting information on the credit history of the offerer and the counter party that’s signed up to that contract is extremely important.”
Keiren Dell, executive director of reverse mortgage association Sequal, said while there were some valid reversion styled products on the market, it was important that investors signing up to any equity release product, which include reverse mortgages, make sure they seek independent legal and financial advice.
A former director of Money For Living, Stephen Mark O’Neill, is currently serving a prison sentence for defrauding investors of a previous mortgage loan company that he ran.
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