Reverse Mortgage Scams

Beware of reverse Mortgage Scams

Unfortunately, as reverse mortgage become more popular, reverse mortgage scams are also increasing.  Schemers capitalize on the little knowledge many seniors may have about reverse mortgages. This is why it's so important to get educated before making any decisions.

As a free service, reversemortgagetoday.org is outlining a few of the scams we have come across.  These scams can potentially cost thousands of dollars in home equity to unsuspecting seniors. The key to avoiding getting ripped off is to be vigilant. All sorts of information that you might need to know is available free of cost through HUD.  

Ways scammers are targeting seniors.

Annuities.

As more financial advisors sell insurance, a recent report indicates some could be unsuitably cross-selling annuities in conjunction with reverse mortgages.

According to a U.S. Government Accountability Office (GAO) report released in June, cites recent cases in which reverse mortgages were sold to seniors to get them to inappropriately invest in annuities.

If a Reverse Mortgage Company is trying to sell you an investment product by suggesting that the fee for can be paid through your reverse mortgage, drop everything and leave.

Many firms that sell annuities and insurance products follow this method. By giving in to the temptation you end up paying way too much more than what is required.

The Foreclosure Rescue

This happens when unscrupulous lenders target seniors who are in danger of losing homes to foreclosure.  The homeowner is then approached by someone who claims they can help them qualify for a reverse mortgage. But what ends up happening is the lender tries to get title to the person’s home, leaving them without a place to live having to repurchase the house at a higher price.

Avoid becoming a victim of this scam by not responding to unsolicited advertisements. Never sign documents you haven’t read or don’t understand.

Annuities.

As more financial advisors sell insurance, a recent report indicates some could be unsuitably cross-selling annuities in conjunction with reverse mortgages.

According to a U.S. Government Accountability Office (GAO) report released in June, cites recent cases in which reverse mortgages were sold to seniors to get them to inappropriately invest in annuities.

If a Reverse Mortgage Company is trying to sell you an investment product by suggesting that the fee for can be paid through your reverse mortgage, drop everything and leave.

Many firms that sell annuities and insurance products follow this method. By giving in to the temptation you end up paying way too much more than what is required.

Appraisals 

The last Scam in this article is in regards to appraisals. Due to strict HUD guidelines in order to qualify for a reverse mortgage you are required to have an FHA appraisal. Upon completion, your loan may be contingent to repairs made to the property before you can close on your reverse mortgage.

Make sure you find exactly what needs to be repaired by the appraiser. Pay close attention to what the appraiser says needs be repaired. Pay extra close attention if he recommends a particular contractor.  Well, you get the idea.

Lastly,  get quotes from different reverse mortgage companies and avoid unsolicited offers.