The Urban Development Office of Inspector General, the U.S. Department of Housing and the Federal Bureau of Investigation have come together to urge all consumers and especially senior citizens to look out for reverse mortgage scams. These may also be known as home equity conversion mortgages or HECMs. These products have increased by more than 1,000 percent between 1999 and 2008. Unfortunately, this great increase has also led to some prime opportunities for fraudsters.
These scams are constructed by corrupt individuals with plenty of expertise in the fields of financial services and real estate. Their sole purpose is to steal the equity from unsuspecting homeowners’ personal properties or flipped properties. In many instances, seniors are offered investment properties, free homes, refinance opportunities or foreclosures. Many scam artists target the elderly through local churches, billboards, radio commercials, mail advertisements, senior citizen center flier boards and various free seminars.
The Federal Housing Authority insures legitimate HECM products. This enables homeowners to get the equity they want without the need for monthly payments. In order to qualify, borrowers must be at least 62 years of age and occupy their current property as a regular residence or have a small loan balance. For further details about this type of financing, discuss the details with an agent.
How To Avoid Reverse Mortgage Scams
Whether fraudsters are using the phone, email or door-to-door solicitation to look for victims, there are several important tips to keep in mind. These con artists know exactly what to look for and how to classify people who may be in need of mortgage help. In some cases, they may even be going through the garbage behind peoples’ homes. The following tips are important to read and remember:
– Do not sign papers that are not understandable.
– Avoid responding to unsolicited advertisements.
– Never accept payment for a home that was not purchased.
– Look for a reputable reverse mortgage counselor.
– Do not trust anyone claiming home ownership is possible without a down payment.
Seniors who fall victim to any of these types of scams may file a complaint by submitting information to a local FBI office. It is also possible to file a complaint with HUD by calling their hotline at 1-800-347-3735. In addition to this, there is a link on HUD’s official site for filing complaints online. For any other concerns about reverse mortgages, how they work or where to find honest counselors, discuss these issues with an agent.