Reverse mortgage scams prey on elderly property owners who are in desperate need of supplemental income and have equity in their homes. Mortgage brokers target these elderly homeowners because they are vulnerable to high pressure sales techniques. Homeowners who are sucked into reverse mortgage scams risk losing their homes, decreasing the value of their probate estate, and increasing their debt.
A reverse mortgage is reserved for homeowners aged 62 and older who have equity in their homes. Unlike a traditional mortgage that allows a buyer to borrow money in order to purchase a home, a reverse mortgage allows an owner to receive cash for the amount of equity they have in their home. Reverse mortgages are targeted towards elderly homeowners because they are retired and no longer have employment-related income. A reverse mortgage will give the elderly homeowner access to a large amount of cash immediately.
A reverse mortgage is usually brokered by a lender. In addition, some reverse mortgages are underwritten by the Federal Housing Administration, as well as by a smattering of scam organizations.
If you find yourself running into unexpected expenses, such as medical bills, a reverse mortgage may seem attractive because it allows you to receive cash up-front without requiring monthly payments. Your home equity is your payment.
When you pass away, sell the home or no longer use the home as your primary home, the balance is due immediately. Any remaining equity leftover is yours.
In addition to being at least 62 years old or older, you must live in the home that you are seeking the reverse mortgage for. You must also:
Though the Federal Housing Administration advises seniors to seek counseling prior to signing the paperwork for a reverse mortgage loan, many homeowners enter into reverse mortgage contracts blindly based on false promises made by scam artists. Scam artists commonly misrepresent the risks of reverse mortgages.
Common scams include:
If you have been pressured into signing a contract for a reverse mortgage, a skilled real estate attorney can review the contract and help you understand its terms. If legal action is necessary, a lawyer can also help you fight enforcement of the contract.
Last Modified: 07-22-2015 11:05 AM PDTLaw Library Disclaimer
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