Watch out for the “quicksand”, it can suck you in.
If your 62 years or older, a legitimate reverse mortgage allows homeowners to convert their home equity into cash. Instead of making a payment each month to your mortgage bank, the bank pays you monthly. You can also elect to receive a lump sum or line of credit. Looks simple, but the “quicksand” of fraud and scams are deceptively alluring.
Speculators are buying houses on the cheap, doing minor cosmetic decorating and then reselling these dwellings to unsuspecting senior citizens at excessive prices. The deal is based on the senior citizen taking out a reverse mortgage sponsored by the scam artist, generally with exorbitant upfront fees. When the reverse mortgage is in place the scam artist usually takes all the money for the payment of the inflated property, leaving the sucker senior citizen holding the bag and probably still owing more money as a result of the terms of the scam transaction.
Also, these scam artists will use inflated appraisals and then promise this “mirage bargain” home with no-money-down, and as part of the swindle, arrange for the sucker to secure a scam reverse mortgage loaded with excessive fees for the service. Thus, the scammer diverts most and often all the proceeds from your reverse mortgage for themselves.
These crooks recruit and con naïve seniors; so do not be tempted by these “sweet-talking” swindlers. Here are a few guidelines to follow regarding any supposed reverse mortgages:
1. Don’t respond to any flashy advertisements and unsolicited promotions.
2. Stay away from anyone claiming you can own a home with zero cash down.
3. Never sign anything you don’t fully understand. Try and have a competent lawyer or accountant review all proposed contracts.
4. Seek out a legitimate reverse mortgage advisor.
5. The scammers target senior citizens through churches, investment seminars, radio, television, and mail/email advertisements.
6. A legitimate reverse mortgage never causes you to give up title to your home.
7. Watch out for upfront fees---never agree to pay them; as this demand is a tip-off that you are being set up for a swindle.
8. Watch out for any reverse mortgages that do not escrow sufficient money to pay required real estate taxes, insurance, etc. This could result in foreclosure.
Again and again senior citizens are being swindled by these “too good to be true” propositions. If you are truly interested in a reverse mortgage for your home that you have lived in for a long time---study the various plans offered by some of the well-known Banks such as Chase, Well Fargo and Bank of America. At least you will familiarize yourself with what programs are currently available. Never get sucked into a “No Money Down” scam promising to get you into a home for free. Run away from any of these sham offers. Be careful, and remember: “IF IT’S TOO GOOD TO BE TRUE--IT IS”! --- ALWAYS!