Reverse
Mortgages...What They are and What to Watch Out For
We Suggest You read
this brochure produced by the AARP for
full information on reverse mortgages
(.pdf format, required
Adobe Reader)
Reverse Mortgages allow seniors (62+) to
obtain a large sum of money based on a formula of the home's value and
the senior's age - and it does not have to be paid back until the
homeowner sells, dies or moves. The senior can take either a lump
sum, line of credit or in monthly payments. Although there are no
payments due during the life of the mortgage, homeowners are still
responsible for taxes and homeowner's insurance.
There are several types of reverse
mortgages that differ in costs, how much money can be borrowed and other
items. These are FHA insured, lender insured and the uninsured.
The most common is the FHA insured called the Home Equity Conversion
Loan (HECM).
With careful consideration, a reverse
mortgage may be very beneficial to many struggling seniors. If you
or someone you know is interested in this type of mortgage, please
consult the services of a HUD certified Housing Counselor. Local
Agencies can be accessed by calling 1-800-569-4287 or 1-888-466-3487.
Beware:
What to Watch Out For...
Be aware of reverse mortgage scams, especially telemarketing schemes.
Telemarketers or other solicitors may come to you and ask for a small
fee for putting you in touch with loan companies and housing agencies
that perform services related to the reverse mortgage. Do not fall
for these schemes - THESE SERVICES ARE FREE!
HUD estimates that several hundred elderly homeowners have been
victimized by companies charging thousands of dollars for information on
HUD Reverse Mortgages. The companies are signing up franchised
distributors and expanding their activities, so without action by HUD,
the number of homeowners charged exorbitant fees for FREE information
could soon grow into the thousands.
Some of these companies bill themselves
as "Estate Planning Services" and will provide you with 'counseling' in
exchange for fees - sometimes up to 10% of the size of the mortgage!
HUD indicated that the firms under investigation convince older
homeowners that they provide a valuable service by giving them
information about reverse mortgages. In fact, lenders report that
all the services often do is give elderly homeowners the name of a
HUD-approved counseling agency and accompany the homeowner to a
counseling session. The counseling is legally required to get a
reverse mortgage.
Lenders have told HUD that these
companies then pressure the homeowner to get lump sum reverse
mortgage payments so that the "estate planners" can collect their entire
fee in one payment. Many of the services and their distributors
are also reported to market multiple insurance policies to the elderly
homeowners to collect even more money from the proceeds of their reverse
mortgage.
If you feel you've been a victim of a
scam involving a Reverse Mortgage or someone has approached you with
such a proposition,
please
Contact Us or Report it to
Your State authorities.
All members on this site have signed a
Residential Mortgage Advocate™ (RMA) commitment to be totally upfront about
their fees, rates and items they will need from you.
Been Scammed or Dealt with an Unethical Lender?
Contact Us or Report it to
Your State authorities.
Check our
