Four reverse mortgage scams to watch out for.
As baby boomers age and enter their golden years, they are taking advantage of the benefits reverse mortgages have to offer. A reverse mortgage is like a home equity loan that doesn’t have to be repaid. It taps into the equity in the home and provides cash assistance so seniors, 62 and older so they can remain in their home. There are unscrupulous scam artists just waiting to prey on seniors applying for these mortgages. Applicants should be aware of some of the reverse mortgage scams.
Incorrect Paperwork
Paperwork that contains misinformation or blank spaces should not be signed. Make certain that all information is correct. If there are mistakes or blank spaces, insist that they be corrected or filled in.
Upselling
One of the loan requirements is that the applicant meet with a HUD approved counselor to be made aware of exactly what is involved in a reverse mortgage. HUD wants to be sure that the borrower fully understands the agreement he is about to enter into. Beware of a counselor who tries to sell other products, such as insurance or annuities. This is not part of the counseling process.
Recommended Contractors
There may be home repairs needed as a condition of the mortgage. A reverse mortgage scam that takes advantage of this situation is when repairs or improvements are offered through a recommended contractor. The contractor then charges much higher than normal prices.
Fee for Service
Do not deal with a company that offers to help find a lender for a fee. HUD provides all of this information free of charge. Report this type of reverse mortgage scam to HUD.
It is very sad that there are people who will take advantage of the elderly through reverse mortgage scams. To avoid these bad guys, verify that the lender is HUD approved. There is a complete list of approved lenders on the HUD web site.
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