As a Senior Real Estate Specialist, I have an interest in the unique real estate needs of seniors. Recently Cora Fume with the Consumer Protection Federal Bureau put together some helpful information on the rise in reverse mortgage scams. From her post:
The COVID-19 pandemic has affected many Americans’ financial and retirement plans. If you’re a homeowner over age 62, you may be thinking about a reverse mortgage. A reverse mortgage is a loan that allows older homeowners to use the equity in their homes. Unlike a traditional mortgage, there is no monthly mortgage payment, and the loan is usually repaid when the borrower sells or no longer lives in the home.
As a result of the economic uncertainty caused by the COVID-19 pandemic, scammers may be targeting older homeowners through reverse mortgage schemes. These schemes can include:
- A trusted family member or caregiver coercing an elderly homeowner into applying for a reverse mortgage loan or impersonating their elderly relative during the loan process.
- Using an older homeowner’s identity, Social Security number, or other personal information without his or her knowledge to get the loan money.
- Tempting reverse mortgage borrowers to use loan money to make a “can’t miss” investment or to take out a reverse mortgage to pay for high-cost repairs or improvements to the home.
- Trying to convince the reverse mortgage borrower to sign a power of attorney that gives the scammer sole access to the reverse mortgage loan money.
Unfortunately, many older homeowners do not realize they have been scammed until the loan money is gone. Scammers often target older adults through community organizations; investment seminars; and television, radio, billboard, and mailer advertisements.