Common reverse
mortgage scams include:
Charging for
information that is provided for free
Beware of estate planning companies that charge for
information provided free from HUD. Typically these estate planning
companies charge for this information as part of an estate planning
program.
Seniors that sign up for these programs are unaware that these
firms are collecting thousands of dollars by charging a fee of
6 to 10 percent of the total amount borrowed. These fees cost
the victims $6,000 to $10,000 on a $100,000 reverse mortgage.
Pushing reverse mortgages as a way to pay for purchases
Some companies that sell large ticket items or services,
like annuities or insurance products, may suggest using a
reverse mortgage as a way
fund these purchases.
Unfortunately, when the additional cost of the
reverse mortgage
is factored into the purchase, it ends up costing the
homeowner
much more than the benefit provided by the product or service.
Unethical reverse mortgage terms
Some lenders include extraneous fees and terms into their
contracts,
which can have a serious effect on a senior's equity.
Some lenders have
used shared equity or shared appreciation
terms, which gives the lender
the right to collect a portion of the appreciation when the home is sold
or refinanced.
The cost of these provisions can run into the tens of
thousands
as the home appreciates. These rising cost provisions eat up
equity without providing any additional benefit to the homeowner.
Read
your contracts carefully, and question any fees or terms
that you do not
understand or expect.
|
Protecting yourself
from scams |
1.
Speak with a HUD approved reverse mortgage
counselor.
The counselor will help
you understand reverse mortgages
and help you
evaluate your situation.
2.
Obtain
several offers from different reverse
mortgage lenders
in order to compare
different options. The rule of thumb is
to get at least three
separate offers so that you have a good
comparison of the terms
offered.
3.
Make sure you understand all the terms and
conditions
within the reverse
mortgage contracts. Your reverse
mortgage counselor
can guide you through the contracts.
4.
You generally have three business days after
signing
the loan document to
cancel it for any reason.
1.
Reporting Possible Fraud
If you suspect that anyone is violating the law, let the
counselor,
lender, or loan service know.
2.
File a Complaint With
* your state Attorney General’s office
* OR state banking regulatory agency,
* AND the Federal Trade Commission (FTC)
You can
do that online at
www.ftc.gov
Or by phone, toll-free at
1-877-FTC-HELP (1-877-382-4357)
