Category Archives: Reverse Mortgages

Reverse Mortgage Fraud: How to Protect Yourself

Reverse mortgage scams that target the elderly continue to be a high priority for federal fraud fighters. At a recent Mortgage Bankers Association conference in Hollywood, Fla., one HUD special agent told conference attendees:

“…elderly people who don’t have their full faculties who are being preyed upon by these guys talking them into reverse mortgages. It’s going to be a real battle in the future because it’s hard to detect.”

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Florida is a hotbed of reverse mortgage fraud, but this kind of elderly financial exploitation is growing nationwide. Watch for these red flags to protect yourself or your aging parents from reverse mortgage fraud.

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Adult Daughter Accused of Stealing $140,000 from Elderly Mom with Alzheimer’s

Financial elder abuse comes in a variety of flavors, but the recipe usually has a few common ingredients: access, opportunity, and motivation. Take this news story out of Montana, for example, where a woman is accused of stealing $140,000 from her mother…

A Missoula woman stands accused of bilking her mother, who has Alzheimer’s, of $140,000 by using a reverse mortgage on her mother’s home to fund a condo purchase for herself….ᅠA doctor who treated Homer’s mother told police that she “was particularly vulnerable to undue influence.”

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In addition to the condo, this woman also spent her mother’s reverse mortgage loan by writing checks to a hair salon and her own two daughters. She also made substantial payments to financial institutions.ᅠ

Why are adult children often found to be perpetrators of financial elderly abuse? Sometimes it’s because they feel they are entitled to an inheritance and they are tired of waiting. Sometimes they are consumed by gambling, debt, or drug or alcohol addiction. And sometimes it’s because they see the money as rightfully theirs — fair compensation for being “stuck” as the primary or only caregiver for their aging parent.

Meanwhile elderly financial victims of family members are often unaware they are being ripped off, or they don’t seek help because they are paralyzed by fear and shame. How do you bring yourself to turn in a child — especially if that child is your primary caregiver? Or legal guardian.

Every time one of these stories makes the news, it always makes me wonder about all the financial elder abuse that goes unreported and undiscovered.

If you suspect that you, an aging parent, or an elder you know, is the victim or financial exploitation, contact your state’s office of Adult Protective Services, which can be found by using this online directory of elder abuse helplines and hotlines.

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AARP Sues HUD Over Reverse Mortgage Foreclosures

For the last 10 years, reverse mortgages have been marketed as an easy way for aging seniors to pay for living expenses by tapping the equity in their home. Now an AARP lawsuit claims that policy changes governing reverse mortgages have made it easier to foreclose on older Americans.

The lawsuit centers around so-called reverse mortgages, which allow those over 62 to collect monthly payments based on the equity in their home instead of making monthly mortgage payments. The loan balance on the home is not due until one of several

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The problem: The new rules state that a surviving spouse who is not listed on the mortgage is required to pay off the mortgage in full — even if the amount due is more than the home is worth.

The AARP lawsuit says that this consequence is in direct violation of another key reverse mortgage provision which explicitly prohibits the amount of a reverse mortgage (which grows over time) from exceeding a property’s value.

Protect yourself: Taking out a reverse mortgage should be a choice of last resort. Make sure you take the required “reverse mortgage counseling” before you sign anything. And if you have a spouse, make sure BOTH of your names are on the mortgage.

For more info about how changes in reverse mortgages are pushing elder homeowners into foreclosure, check out this brief video from CNN.

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