Reverse Mortgage Scams
Reverse mortgages are gaining in popularity as further senior’s start exploring for means to supplement their retirement incomes. And as the interest in reverse mortgages increase, so are the cases of reverse mortgage fraud and scams.
A lot of seniors are finding that they have lost thousands dollars of their hard earned equity to these reverse mortgages scams. Because reverse mortgages typically involve our major asset (our home), this type of fraud can have a serious negative impact on your retirement. The subsequent reverse mortgage fraud info will enable you avoid turning into a victim of a reverse mortgage scam.
Reverse Mortgage Scams
The are a few types of reverse mortgage scams that can end up costing you thousands and even tens of thousands of dollars in equity in your house if you get a victim.
Charging for cost-free data on reverse mortgages
Many estate planning companies have been charging thousands of dollars for info furnished cost-free from HUD. Typically these companies charge for this details as portion of an estate planning program. Seniors that sign up for these programs are unaware that these firms are collecting thousands of dollars by charging a fee of 6 to 10 percent of the total quantity borrowed. These fees costs the victims $6,000 to $10,000 on a $100,000 reverse mortgage. HUD has recently issued a directive to lenders that issued reverse mortgages insured by the Federal Housing Administration (FHA) to stop doing business with these companies.
Pushing reverse mortgages as a way to pay for purchases
Some companies that sell huge ticket items or services, like annuities or insurance products, may try to suggest utilizing a reverse mortgage as a way fund these purchases. When the additional cost of the reverse mortgage is factored into the purchase, it ends up costing the homeowner significantly added than the benefit furnished by the supplement or service.
Unethical reverse mortgage terms
Some lenders slip in excessive fees and terms into their contracts. These terms can have a serious effect a Seniors equity. In some cases, lenders have utilised shared equity or shared appreciation terms, which gives the lender the right to collect a portion of the appreciation when the dwelling is sold or refinanced. The cost of these type provisions can run into the tens of thousands as the home appreciates. These rising cost provisions eat up equity without providing any additional benefit to the homeowner.
Protecting yourself from reverse mortgage scams
If you are looking into reverse mortgages, there are a number of items that you can do to defend yourself from falling victim to these types of scams.
1. Speak with a HUD approved reverse mortgage counselor. The counselor will guide you understand reverse mortgages and guide you evaluate your situation.
2. Obtain a number of offers from various reverse mortgage lenders in order to compare numerous options. The rule of thumb is to get at least three separate gives so that you have a beneficial comparison of the terms offered.
3. Make sure you understand all the terms and diseases within the reverse mortgage contracts. Your reverse mortgage counselor can guide you through the contracts.
4. You generally have three industry days after signing the loan document to cancel it for any reason.
If you suspect that a firm is operating in violation of the law, let your reverse mortgage counselor know and then file a complaint with your State Attorney General’s office or banking regulatory agency and the Federal Trade Commission (FTC) at www.ftc.gov.
