Reverse Mortgages are becoming
popular in America. Reverse
Mortgages are a special type of
home loan that lets a homeowner
convert the equity in his/her
home into cash. They can give a
lot of older Americans greater
financial security to supplement
social security, meet unexpected
medical expenses, make home
improvements and more.
If you are interested in a
reverse mortgage, beware of scam
artists that charge thousands of
dollars for information that is
free from HUD!
Also, be cautious if anyone
tries to sell you something like
an annuity, and suggests that a
Reverse Mortgage would be an
easy way to pay for it. If you
don’t fully understand what
they’re selling or you’re not
sure you need what they’re
selling, be even more skeptical.
No matter why you decide to take
a Reverse Mortgage, you
generally have at least three
business days after signing the
loan document to cancel it for
any reason without penalty.
Remember that you must cancel in
writing. The lender must return
any money you have paid so far
for the financing.
To report fraud or abuse in the
Reverse Mortgage program,
contact the Division of Mortgage
Lending at
http://www.mld.nv.gov/.
Top
Three Reverse Mortgage Scams
1) Charging for Free Reverse
Mortgage Information
Reverse Mortgages are more
complicated than the average
mortgage loan. Knowing that,
some con artists offer - for a
fee - reverse mortgage
information and services that
are available to consumers at no
charge. For example, some senior
homeowners have been contacted
by firms offering to assist them
in finding a reverse mortgage
lender, in exchange for a
percentage of the loan. This
type of arrangement should
always be avoided.
HUD provides this information
without cost, and HUD-approved
housing counseling agencies are
available for free, or at
minimal cost, to provide
information, counseling, and
free referral to a list of
HUD-approved lenders. Call
1-800-569-4287, toll-free, for
the name and location of a
HUD-approved housing counseling
agency near you.
2) Downplaying Pre-Loan
Counseling or Not Providing It
An educated borrower is the scam
artist's worst enemy - but it’s
up to the borrower to educate
themselves and take advantage of
counseling and other
opportunities to learn about
reverse mortgages. All three
major reverse mortgage programs
- HUD HECM, Fannie Mae’s Home
Keeper and Financial Freedom -
require potential borrowers to
have counseling with an
independent counselor specially
trained in reverse mortgages
before taking out a loan.
It is always best to meet
face-to-face with the counselor.
If the person you’re working
with offers to waive the
counseling by asking a few
simple guestions, be on your
guard. The scam artists may not
tell you how much your eligible
for and pocket the difference.
3) Forgery
Forgery is a key part of many
scams. In one case, the lender
requested the title company to
prepare two checks payable to
the homeowner: one for $61,000
which the homeowner received and
a second one for $42,000 which
the corrupt lender endorsed with
a forged signature and deposited
into his own account.
To protect yourself, never sign
documents with blanks to be
filled in or corrections to be
made later. Carefully protect
access to your checking and
other accounts. Review and
reconcile checking account and
loan statements regularly. If
you find something suspicious,
contact your financial
institution immediately.
Sources:
http://www.hud.gov/buying/rvrsmort.cfm,
http://www.ftc.gov/bcp/edu/pubs/consumer/homes/rea13.shtm
and
http://ezinearticles.com/?Five-Reverse-Home-Mortgage-Scams-to-Watch-Out-For&id=273604.
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