Five Reverse Home Mortgage Scams to Watch

From all accounts reverse mortgage is about to explode in growth. Baby boomers are reaching retirement age and for the most part, home equity makes the most of their nest egg. Reverse Mortgages are the tools to use many of these retirees to live in this nest egg for retirement water pipe. The number of new HUD Heritage House Conversion Mortgage (HECM) has already increased by over nine percent in the first Months of 2006 compared to the same period a year ago.

But along with growth come increased opportunities for reverse mortgage fraud and deceit. Reverse mortgages differ from traditional mortgages in ways that make them attractive vehicles for fraud:

Reverse mortgages are products specifically designed and targeted for the elderly, the population group most at risk of fraud;

The scammers know that a reverseMortgages> Offer elderly homeowners with relatively easy access to a pool of liquidity, and

Reverse mortgages are harder to understand than conventional mortgages make it easier for scammers to confuse and exploit victims.

In this article we look at some of the tactics scammers use and precautions to protect reverse mortgage borrowers.

One tactic scam - Pre-Loan Counseling trivialization

Aeducated borrower is the deceiver of the worst enemy - but it's the borrower to educate themselves and take advantage of counseling and other ways to learn about reverse mortgages.

All three major reverse mortgage programs - HUD HECM, Fannie Mae Home Keeper and Financial Freedom - require potential borrowers with an independent consultant, mainly in the reverse mortgage counseling before a workout loan.

In a recentDetroit-area case of fraud has become a corrupt lender is able to keep the borrower in the dark about the amount he was entitled to borrow. He thought that his loan would be $ 61,000, when it was really $ 103,000 loan. Guess who pocketed the difference of $ 42,000? In-depth consultation would be given the hosts have a precise idea of ​​the content was true, they say. Unfortunately for the victim, the prosecutor in the case says that this never happened:

"A consultation to explain thereverse mortgage from Financial Freedom process was required before the loan can be processed. James informed Mrs. Schultz said he would be successful, consultation with a few questions on the phone to avoid. "

Warning: although telephone counseling is allowed, it is always better to meet face to face with the consultant. If you find someone who works with the process indicate that counseling can be done quickly onTelephone or otherwise diminish the importance of pre-loan counseling, highly suspect.

Scam tactic two - forgery

Counterfeiting is an important component of many scams. In the case of Detroit, cited above, the creditor, the company has applied for two grants to prepare the house for just $ 61 thousand for the home owner and a second for $ 42,000, that creditors corrupted by a forged signature confirmed account and deposited.

In one case in California, two con artists- A position as a financial advisor the other a mechanic - an old house believed to pay for the completion of a reverse mortgage for home repairs. The financial adviser opens an account for the amount of the loan and obtain forged the victim's name , access to funds.

Another case reported in the Sentinel of California at Santa Cruz, shows how dangerous it can be, "unfinished" to sign the documents:

Ms Sally Scott is 66 years. While receiving social security andPension checks, which still can not make ends meet. He saw an ad for a mortgage "reverse" - a loan that seniors can age 62 years in cash by borrowing against their homes and do not need to receive a refund on condition that live there. I'm looking for a small pillow Financial, said a mortgage broker on a $ 10,000 reverse mortgage.

When they received the loan papers, he noticed that the loan amount was $ 200,000. The broker promised that the changeFigure, but insisted that they sign the documents first. Relying on the broker, signed Mrs. Scott.

A week later he received a check for $ 200,000. They immediately informed the broker, who apologized for the mistake and ordered them to tie their money back. As it turned out, the bill that Mrs. Scott returned the money belonged to the broker. He disappeared, he left with a mortgage in default and no way to repay the loan.

Warning: do not signThe documents are filled with blanks or corrections may be made at a later time. Access attentive to your bank account and other accounts. Review and reconcile account statements and credit regularly. If you find something wrong, please contact your bank immediately.

In the case of Detroit, cited above, the victim caught the scam when she was a credit note for the balance of their reverse mortgage (including interest) $ 131,000.

Also takeAdvantage of free credit report available to you under federal law. Check your credit report every year, a good way to catch unauthorized financial activities under your name.

Three tactics scam - Taxes for Free Reverse Mortgage Information

The complexity of mortgage would mean that the opposite is natural to seek help and counseling for borrowers to help them understand the loan process, you will find a lender or in general to better understand what they areEntry into some scammers have seized on this to offer - for a fee - reverse mortgage information and services available to consumers free of charge.

For example, some owners of older homes have to offer from the company to help them find a reverse mortgage bank, was contacted in return for a share of the loan. This type of agreement should always be avoided. According to the HUD Web site:

HUD does not recommend using an estate planning service, or Service that charges a fee just for referring a borrower to a lender! HUD provides this information without cost, and HUD approved housing counseling agencies are available free or at minimal cost, for information, advice and offer free membership for a list of HUD-approved lender. Call 1-800-569-4287, toll-free number for the name and location of a HUD approved housing counseling agency near you.

Caution: Do not go away from everyone is an inverse Articles> Bank mortgage payment. Use the Internet to get free information about reverse mortgages, or find, to read one of the many books that have been published in recent years.

If you feel you need for a professional to assess your overall situation - the reverse mortgage decision - find a Certified Financial Planner (CFP), which operates on a fee-based and only those with expertise in reverse mortgages (many Aren 't).

FraudFour tactics - Posing as a government or non-profit representatives

The most popular Reverse Mortgage - Home Mortgage Assets conversion, (HECM) - is an official program of the U.S. Department of Housing and Urban Development (HUD). However, neither the HECM reverse mortgage program, other programs directly to homeowners by senior government officials are marketed.

Reverse mortgage unscrupulous sellers have been known to makeHomeowners are older than government officials or volunteers for nonprofit organizations.

Warning: Make sure you know who it is and what the organization they represent. Do not be afraid to ask for information such as home office location and telephone number. Use resources such as HUD and the National Reverse Mortgage Lenders Association (NRMLA) to control the company.

Five tactics scam - Things with BundlingReverse Mortgage Financing

Smart consumers know that the best way to separate an auto shop, parties in the transaction - the purchase, financing and trade-in - from each other. With a bundled transaction, just got too confusing for the consumer and does not understand the real cost of the transaction. What looks like a "grand prize" to finance the car may hide exorbitant fees or a compromise of low value.

Bundle Similarly, a common tactic of scammers is reversedMortgage financing with something else, such as home improvements, debt, investment risk, living trust or other estate planning products.

In one case, the Seattle area, older consumers have been told that living trusts must be purchased to obtain a reverse mortgage. In another case, the elderly were encouraged to "invest" a reverse mortgage and invest the proceeds in truck-mounted billboards.

Often scammers, two or moreTeam. For example, in the case mentioned in California, led by an unscrupulous financial advisor to the house, a home repair contractor, the party of fraud and the victim has been grossly overcharged for repairs.

If you're dealing with someone who is a reverse mortgage you are in a different product or service or a package of monitoring a particular contractor / provider is trying to find highly suspicious. If you ever feel uncomfortable or that the person withHigh pressure sales tactics, walk away.

Warning: If necessary, home improvements, or estate planning services is to offer the best shop. And 'better for you to find what you need to find it for you, instead of trying. Homeowners should avoid doing business with someone who was invited to hand, you make a phone call or unsolicited whose name is found randomly on a flier.

If you find the best deal, then weigh funding options - including areverse mortgage. If you look at these decisions away for protection against possible fraud and to ensure that you get the most for your money.

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