reverseYou have probably seen the ads on late night television where a former senator or an older television star informs the viewer how easy it is to obtain a Reverse Mortgage. The pitch goes something like “You can obtain some needed cash and you still own your home!” Unfortunately, such offers can easily be converted into fraud schemes that target senior citizens and the substantial equity in their homes.

If you are considering a reverse mortgage be careful.  Reverse mortgages, also known as Home Equity Conversion Mortgages (HCEM) have increased more than 1300% from 1999 to 2008, creating significant opportunities for fraudsters.

Reverse Mortgage Scams are devised and developed by unscrupulous individuals in real estate and financial services. Seniors are offered free homes, investment property, and foreclosure or refinance assistance, and are sometimes used as “straw buyers” in property flipping scams.   

Some scammers target senior members of local churches, send invitations to “investment seminars,” and use television and radio media to attract unsuspecting victims. Once a senior’s name and other personal information are known there is no let up until he or she has been victimized.  No promise is too small or outlandish when made, but few if any are honored.

A legitimate HECM loan product is insured by Federal Housing Authority. It enables eligible homeowners to access the equity in their homes by providing funds without incurring a monthly payment.  Eligible borrowers must be 62 years old or older, occupy their property as their primary residence, and own the property or have a small mortgage balance.

Tips for Avoiding Reverse Mortgage Scams

  • Do not respond to unsolicited advertisements.
  • Be suspicious of anyone claiming that you can own a home with no down payment.
  • Do not sign anything that you do not fully understand.
  • Do not accept payment from individuals for a home you did not purchase.
  • Seek out your own reverse mortgage counselor.

If you are the victim of a reverse mortgage fraud, contact Cadfael immediately at (763) 694-6086. If you would like to have one of our experienced investigators speak to your group on preventing fraud, call (763) 694-6086.