Beware of mortgage scam

By: Ask Bill

What is a reverse mortgage scam? Reverse mortgage is a loan available to seniors, and is used to release the home equity in the property as one lump sum or multiple payments. The homeowner's obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves. Many seniors entering into reverse mortgages don't fully understand the terms and conditions associated with the loans, and it has been suggested that some fraudulent lenders have sought to take advantage of this. And a reverse mortgage scam is one of the worst scams committed by scam artists because it preys on the elderly and their desire to be financially secure after they have left the workforce. All that a reverse mortgage scam does is that they rob senior’s money by forcing them to pay large sums up front or by stealing personal information. Seniors who are in need of some cash sometimes fall into the trap of reverse mortgages scams through fake websites and reverse mortgage companies who charge too much. This is an awful situation for a senior to be in, because they may lose thousands of dollars to the scam artists, and turn into a severe financial burden for their family.

Reverse mortgages tend to be somewhat costly, but the benefits normally make the expense well worth the price. Unfortunately, whenever there is money to be made, you may find deceitful people wanting to take advantage of the situation. The last thing anyone looking at retirement needs is to become the victim of a scam. Often the mortgage scammers claim to represent government agencies and charge fees on reverse mortgage for delivering basic information. These companies may charge six to ten percent of the entire loan amount just for the senior to get the name of a reverse mortgage lender. You may very well get free information on who grants reverse mortgage from the Department of Housing and Urban Development (HUD). This is one of the most common types of scams. The fraudulent person may also ask the senior citizens to sign incomplete documents and in turn, the homeowners end up losing their properties.

You may be able to avoid scams and pitfalls by considering the following reverse mortgage advice. Make sure to deal with lenders who are approved by the Department of Housing and Urban Development (HUD). Only lenders who are approved by HUD can offer government insured reverse mortgages. Check with the HUD website to be certain that your lender is authorized to handle reverse mortgages. You need not surrender to any pressure to make a decision or sign an application before you have all the facts and have looked out for reverse mortgage counselors with a hidden agenda. Reverse mortgage may require repairs made to the property before you can close on your reverse mortgage. Make sure you find exactly what needs to be repaired by the appraiser. If you are approached about using a reverse mortgage on a rehab or foreclosure property and asked to sign a quit claim deed up front, you can be sure that this is likely fraudulent. And if at all you suspect that a company is operating in violation of the law, let your reverse mortgage counselor know and then file a complaint with your State Attorney General's office or banking regulatory agency and the Federal Trade Commission (FTC). It is always advisable to do proper research about your lender to make sure you do not fall into a reverse mortgage scam.

Article Source: http://yourfinance.co.za