Avoid Reverse Mortgage Scams

These are a few Reverse Mortgage Scams that are going around. These are different than Reverse Mortgage Disadvantages. To find out the Reverse Mortgage Disadvantages and Advantages, please call a Reverse Mortgage Specialist at 1-888-973-8377.

Charging for information that is provided to all people for free.
Beware of estate planning companies that charge for information provided free from HUD. Typically these estate planning companies charge for this information as part 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 amount borrowed. These fees cost 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 large ticket items or services, like annuities or insurance products, may suggest using a reverse mortgage as a way fund these purchases. Unfortunately, when the additional cost of the reverse mortgage is factored into the purchase, it ends up costing the homeowner much more than the benefit provided by the product or service.

Unethical reverse mortgage terms.
Some lenders include extraneous fees and terms into their contracts, which can have a serious effect on a senior's equity. Some lenders have used shared equity or shared appreciation terms, which gives the lender the right to collect a portion of the appreciation when the home is sold or refinanced. The cost of these 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. Read your contracts carefully, and question any fees or terms that you do not understand or expect.

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