Always Be Careful!
Financial scams specifically targeting seniors rank among the fastest-growing crimes in the United States. Overall, some 25 million Americans are victims of consumer fraud each year, according to the Federal Trade Commission. As the number of seniors in the country increases, so will the number of scams meant to defraud them of their money.
One of the fastest-growing schemes directed at seniors is the reverse mortgage scam.
Reverse mortgages are a popular choice among seniors looking for additional income. They allow anyone who is 62 or older, who either owns their home or has a small mortgage balance, to access their equity. For seniors on a fixed income, it can be a very appealing idea; so much so that the number of these reverse mortgages increased more than 1,300 percent between 1999 and 2008.
Unfortunately, whenever there’s that much money at stake, someone will find a way to profit illegally.
As reverse mortgages are a vehicle intended solely for seniors, they are obviously the ones at risk from fraudulent reverse mortgage schemes. These schemes are intended to either steal equity from the property of unsuspecting senior citizens to use these seniors to help the fraudsters steal equity from a flipped property. In many of the reported scams, victim seniors are offered free homes, investment opportunities and foreclosure or refinance assistance. They are also used as “straw buyers” in property flipping scams. Seniors are frequently targeted through local churches and investment seminars, as well as television, radio, billboard and mailer advertisements.
A legitimate reverse mortgage, also known as a home equity conversion mortgage, is insured by the 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 or older who occupy their property as their primary residence and who own their property or have a small mortgage balance.
If you or someone you know is approached with a reverse mortgage opportunity, please bear these tips in mind – and Always Be Careful:
- Do not respond to unsolicited advertisements.
- If you’re told you must act right away – don’t.
- Be suspicious of anyone claiming that you can own a home with no down payment.
- Do not sign anything you don’t fully understand.
- Do not accept payment from individuals for a home you did not purchase.
- Seek out your own reverse mortgage counselor.
For more information about how to prevent financial exploitation, visit Elder Financial Safety Center.