In conjunction with National Seniors Day on Wednesday, New York State CouncilThe Department of Consumer Protection is disseminating a series of tips aimed at helping seniors avoid financial scams and exploitation. One way bad actors may try to take advantage of older Americans is through reverse mortgages.
“Not all reverse mortgages are scams, but scammers may impersonate the lender and pressure you to sign a contract,” the department advises in the advisory. “These scam lenders often reach out unexpectedly without clearly explaining how the loan works.” It works by saying you shouldn’t talk to other lenders, or by not fully explaining the real risks of a reverse mortgage. They may also pressure you to sign documents you haven’t had a chance to read and don’t fully understand.
Legitimate reverse mortgage professionals will not prevent clients from talking to others about these loans and how it will affect the borrower’s financial situation. The industry as a whole has been encouraging customers who are considering a reverse mortgage to discuss it with trusted sources, including friends, family and professional financial advisors.
this U.S. Department of Housing and Urban Development (HUD) also requires mandatory counseling for any loan that is part of the program. federal housing administration (FHA)’s Home Equity Conversion Mortgage (HECM) program, which accounts for the vast majority of reverse mortgages in the United States
The announcement also pointed out to people that the Consumer Financial Protection Bureau (Bureau of Consumer Protection).
“Don’t rush into any decisions, and don’t assume that potential lenders know which financial decisions are in your best interest,” it reads. “Do your own research and shop around with multiple potential lenders. Visit the U.S. Consumer Financial Protection Bureau website to learn more about how legal reverse mortgages work.
Eagle-eyed reverse mortgage professionals have also played a role in the past in identifying scammers who aim to exploit the product for illicit means. An alleged scammer nearly caused financial harm to an elderly Canadian man earlier this year, but the quick thinking of an area reverse mortgage professional led to the suspect’s arrest.
