With the amount of baby boomers reaching retirement age, reverse mortgage scams are on the rise. It’s an unfortunate thing, but there are people out there who are scamming senior homeowners out of their money. Fortunately, if you know what scams to look out for and you are well educated in reverse mortgages you can avoid being scammed and be able to get a reverse mortgage with no problems.
Here are some popular reverse mortgage scams that you need to be on the lookout for.
Every one of the major reverse mortgage program requires you to take independent counseling before you are approved for the mortgage. This is so the independent counselor can educate more about the loan and what specifically you are eligible for. Any lender who claims that you don’t need counseling or down plays its importance may be trying to run some sort of scam over on you. During your counseling, the person will let you know how much money you are eligible to receive on the reverse mortgage. Without counseling before you sign the papers, a potential scammer could take part of your loan and you may not even know it. There have been reverse mortgage scams reported where the homeowner takes out a loan for what they think is about $60,000 and actually it is more like $100,000. The difference is pocketed by the scam artist posing as the lender or financial advisor trying to help you. This means you lose thousands of dollars that eventually has to be paid back.
Another reverse mortgage scam involves the senior homeowner signing loan papers that are unfinished or not correct. The thing that you have to remember is that you never sign papers that are incorrect or unfinished and expect them to be fixed after you sign them. Instead, refuse to sign the papers until they are corrected and to your exact liking. One of the scams that have been reported by homeowners is that they sign the papers with a greater loan amount or no loan amount filled in. The scammer, posing as a financial advisor says that he will fix the paperwork after you sign them to get them done and processed as soon as possible. When the check comes for the homeowner in the wrong amount they are told to give it back to the advisor or to wire him the difference in the loan amounts and then he takes off with the money and never to be seen again. This could mean the difference between you taking out a loan for $10,000 and $100,000. Even though this is reverse mortgage fraud, there have been people who get away with it and the homeowner doesn’t even realize it.
Another one of the reverse mortgage scams to be aware of are people who pose as the government or a non-profit organization. Some salesmen actually use the selling point that they work for the government and that you should only work with them to get a reverse mortgage, but actually the government doesn’t hire workers to market to senior homeowners. The most popular reverse mortgage called Home Equity Conversion Mortgage (HECM) is actually run by the U.S. Department of Housing and Urban Development (HUD) but these people will never ever seek you out for a reverse mortgage. Instead you come to them and go through this program directly rather than dealing with some government worker trying to persuade you to get a reverse mortgage. Always be sure you know who exactly you are talking to or working with on your reverse mortgage. Don’t be embarrassed to ask for more information from the person such as their business number, their address, and other business information. If you are still leery about someone, you can always contact HUD directly and ask them for verification and they can help you determine what exactly is going on and who you may be working with. They answer all kinds of questions and they are there to help you and protect you from reverse mortgage scams.
Being informed and educated is the best way to protect yourself from reverse mortgage scams. Some people assume that older homeowners are not educated about these things and they take advantage of their trust, but you don’t have to be a victim of reverse mortgage scams if you look out for the described scams and make sure you get help from HUD when you need it.
Click Here to learn more about reverse mortgages and how you can prevent being scammed.