Predatory lending with reverse mortgages? 

The government insures reverse mortgages. 

First, reverse mortgage lenders Tulare can impose an origination fee based on the home's worth up to $6,000 The 2% price you find most worrisome is HUD mortgage insurance, of which the lender gets none. Reverse mortgage insurance is paid to HUD to insure against borrower default. You may think that amount is outrageous, but in 2015, Congress almost shut down the program due to a $5 billion shortfall caused by property value shortfalls upon borrower's death and defaults and claims payments made to the Mortgage Insurance Premium (MIP) fund for things like taxes and insurance that borrowers failed to pay and HUD had to advance on their behalf. Due to the catastrophic losses, HUD adopted financial assessment rules to prevent borrower tax and insurance defaults and modified upfront and renewal MIP premium payments. Since, MIP premiums have been cut from HUD's elevated levels. 

Costs vary by state. 

All additional fees on these disclosures are third-party fees. Documentary Tax Fees, Intangible Taxes, and Title Insurance Costs are among the highest in the nation, making them the highest closing costs of any state. Everything from title fees to document fees to credit report fees to tax service fees are all charges from other companies who provide those services for reverse mortgages (a specialised lending process). Reverse mortgage lenders cannot, by law, add even one penny to their fees or state regulators can fine and licences are at risk if a pattern of overcharges is shown. Reverse mortgage lenders undertake frequent audits in Florida and every state where they hold a lending license. If a lender charges $37.50 for a credit report, there must be an invoice for $37.50, and so on for every fee in the file - to the cent. A lender may charge an origination fee, which is the sole fee in the package you got. 

Reverse mortgages aren't for short-term borrowing 

A reverse mortgage's closing expenses are "front end loaded," meaning they're paid at the beginning of the loan. The reverse mortgage is a terrible short-term option. The loan was meant to be your last, not an interim finance tool. You receive a TALC (Total Annual Loan Cost) disclosure showing this. If you read the TALC disclosure from left to right, you'll discover that it has a very short repayment time, and as you said, the loan fees can be above 40% if repaid in a year or two. As the loan is extended out over 17 years, the cost is generally decreased to 4% or less (I don't know what yours is, I don't have it in front of me). If you read our articles and blog posts, you'll see why reverse mortgage businesses warn consumers a reverse mortgage is not a smart choice for a short-term loan and they should consider a Home Equity Line of Credit (HELOC) or other option. You must determine your goals before choosing a loan. 

The longer you have a reverse mortgage, the less you pay. 

If you desire a loan for 17 years without payments, the HELOC won't work, but the reverse mortgage can. Since HUD takes a risk by insuring a loan against losses it may not see for years, you must pay for insurance to get a loan. You must understand that it's not the reverse mortgage lender who charges for insurance, and it's your judgement if the loan is suited for your circumstances. If you have difficulties with HUD's program, administration, or prices, you should contact HUD or Congress since they can make any changes. AARP is aware of the program and has a complete write-up on it on their site, which includes your concerns about the HUD Mortgage Insurance fees for the loans being based on the appraised value, the other fees involved, and the capped $6,000 origination fee that I mentioned above (it's a very good article and I recommend you read it). 

It was never wrong to be honest with people and allow them make educated decisions about their houses. We don't "sell" this loan. We can only give individuals honest information; it's up to them to consult their financial experts, relatives, or trustworthy sources and make the proper decision depending on their goals. This loan may not be suited for you, and we appreciate that. But now you have the right facts and can act accordingly.