Like all businesses, there are representatives that are doing an honest job offering themselves for service and help. And unfortunately there are others seeking their own personal advantage. This applies even to reverse mortgages, as the elderly are often prey to scams. Do not be naive and assume that because the program is there to help, that all the offers are true to the reason the program exists.
Having a team on your side of a reputable reverse mortgage specialist and a third party counselor, in addition to friends and family, is a big step to ensuring you are doing everything right.
There are some easy red flags to look for. Here are five giveaways of a reverse mortgage scam:
They ask for money up front
Once you submit an application to a reverse mortgage lender it is fairly standard for them to ask for a deposit for the appraisal. This is usually about $300.00 dollars, but can vary slightly. If you are asked to give anything else, stop. Very little money is required before the closing of the loan. Seek advice before moving forward and do not let yourself be pressured.
They will offer foreclosure assistance
Credible reverse mortgage lenders will not seek out distressed homeowners to offer foreclosure help.
They will show unethical marketing practices
There is a Consumer Financial Protection Bureau that holds all reverse mortgage lenders accountable. If a lender is using public means such as community centers, churches, television or even door to door marketing to pique your interest- beware!
They employ high pressure sales tactics
If you feel uncomfortable or pressured when meeting with your lender, stop. If your questions are not being addressed or the lender is pushing you to a quick decision, you are still in the driver’s seat and it is time to stop and reevaluate working with them.
They lack credibility and reputation
If your reverse mortgage specialist and lender is credible, they will have professional associates such as the Better Business Bureau, the FDIC and the National Reverse Mortgage Lenders Association behind them.
Reverse mortgage is an individualized, specialized loan for those 62 and older that allows seniors to tap into the equity of their home while living mortgage and loan payment free. The funds can be accessed via a lump sum, line of credit, monthly installments, or even to purchase a home. If you are planning ahead let your specialist guide you creatively to suit your needs and desires.