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Beware of Reverse Mortgage Scams


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TERMINOLOGY

Reverse mortgage scams are becoming a large problem in the mortgage market today. A reverse mortgage is a tool that is commonly used by seniors that are looking for a way to supplement their income. The success of the program has spawned many con artists that hope to take advantage of these seniors. Here are a few things to consider about reverse mortgage scams.

Misrepresentation

One of the most common reverse mortgage scams involves an individual posing as a government employee. Since the most popular reverse mortgage program is backed by the FHA, it is very common for people to assume that government employees would play a role in the program. However, government employees do not market this program directly to consumers. If anyone approaches you about a reverse mortgage and claims to be a government employee, you should most likely stay away from them. They are using this identity to try and develop some type of rapport with you and you should see right through their tactic.

Counseling

As a requirement of getting a reverse mortgage, you will have to go through a pre-loan counseling process. This process is designed to help you make an informed decision about your reverse mortgage. They will outline the entire process for you and explain how the mortgage program works. Many unscrupulous lenders will attempt to downplay the role of counseling in the reverse mortgage process. They attempt to get you to avoid the counseling process so that they can take advantage of you. For example, they may try to tell you that you are only eligible for a $50,000 loan. In reality, you were eligible for a $100,000 loan. The lender might be able to set up a loan for $100,000 and then pocket the difference between the two amounts. If you had been to a counseling session, you would be able to find out that you are eligible for the full $100,000.

Check Background

If you start to work with a reverse mortgage lender, you need to do a thorough background check on them. You need to find out as much information as you can about this particular lender in order to determine if they are legitimate. You should start out by checking with the Better Business Bureau. If they are a legitimate lender, they will have a profile on the Better Business Bureau website. You will be able to pull up their profile and see what the Better Business Bureau has to say about them. They will provide a grade that represents how they have treated their customers in the past. You will also be able to see how many customer complaints they have had filed against them in the last few years. If there are customer complaints filed, you will also be able to see if the company resolved the complaints or not.

You should also check other online sources to see what other individuals have to say about the lender. The chances are, if the lender is a scam, they will have taken advantage of someone else before they get to you.