Reverse Mortgage Scams on the Rise

The FBI and the U.S. Department of Housing and Urban Development Office of Inspector General have urged senior consumers to be wary of scams involving reverse mortgage products.

Between 1999 and 2008, use of reverse or Home Equity Conversion Mortgages, increased by more than 1,300 percent — a trend that has also increased opportunities for fraud, an issue to which seniors are especially vulnerable.

In many of the reported scams, seniors — often targeted through local churches, investment seminars, and television, radio, billboard, and mailer advertisements — have been offered free homes, investment opportunities, and foreclosure or refinance assistance.

Finally, with this issue increasing, the FBI & HUD have teamed up to inform producers and their senior clientele of a legitimate Home Equity Conversion Mortgage — insured by the Federal Housing Authority — that enables eligible homeowners to access the equity in their homes by providing funds without incurring a monthly payment.

For more information, read the FBI Intelligence Bulletin, entitled: "Home Equity Conversion (Reverse) Mortgages Exploited to Defraud Senior Citizens."

Debt settlement scams are also on the rise, as we'll discuss in another report on this blog.