Each year, thousands of unsuspecting homeowners are duped into reverse mortgage scams, says the FBI. Don’t let this happen to you. Here’s how.
In some of the most common reverse mortgage scams that exist, the FBI says that homeowners are made lofty promises. A few of which include: free homes, investments, refinancing assistance and more. Common advertising gimmicks can include media ads, mailed ads, seminars and even door-to-door salespersons.
Becoming a victim of a reverse mortgage scam can have lasting effects on your life. For starters, you can be swindled out of all of the equity that you worked so hard throughout your career to earn. You can also be left with a destroyed credit rating and even lose your home. Fortunately, there are signature red flags that you can spot, and there’s a way to fight back against scammers out to defraud you of your home.
You Are Not Allowed to Choose Your Reverse Mortgage Counselor
This is the surest sign of ill-intent. HECM borrowers are required by federal law to enter into counseling sessions before they can even apply for these reverse mortgage home loans. But scammers don’t want you to know what your rights are. If you are told you can skip counseling, or are only referred to the lender’s preferred counselor, you are dealing with a crook.
The Lender Tries to Make Your Appointments for You
Another key sign of a reverse mortgage scam, according to the FBI, is the lender making appointments on your behalf. You actually have to make these appointments yourself. Even if you are offered a list, a lender can make an appointment for you to a counselor that is part of their gimmick. So tread carefully.
Lender Tries to Get Money from You Right Away
If you have not yet made your counseling appointment and gone through with it, it’s against the law for a lender to take ANY money from you. In fact, it’s unlawful for the lender to do anything with your application until you have a certificate of attendance from your counseling sessions that is signed by your counselor.
Loan Insurance is Sketchy
By law, it should be very clear who is insuring your HECM loan. They can only be insured by the Federal Housing Administration and no other agency or entity. If that name is not prevalent on the documents, it’s a sure sign of a reverse mortgage scam.
Most lenders are legitimate. Make sure that yours is, too, and you can proceed with your reverse mortgage in confidence.