How To Avoid Reverse Mortgage Fraud

Reverse mortgages are becoming popular all across the great USA. These loans are a special type of home equity loan that allows a homeowner, age 62 or older, to convert a portion of the equity in their home into tax-free cash. They can give older Americans greater financial security to supplement social security, meet unexpected medical expenses, make home improvements, and more. However seniors need to be aware that there are lenders in the market that are well...let's say less than honest.

If you are interested in a reverse mortgage here are 5 things that will help you avoid shady lenders and looking like a all day sucker.

1. Beware of scam artists that charge thousands of dollars for information that you can get for free. While I advise caution you don't have to be afraid. Of the 4 million general complaints about all types of loans to the FTC between 2005 and 2008 only 50 have to do with reverse mortgages. So overall there are much bigger problems with other types of loans.

You can find all the information you need to know about reverse mortgages free on HUD's website and at How Do Reverse Mortgages Work.

2. If you suspect fraud report it quickly to your local homeownership center.

3. Beware of shady marketing techniques that use copy cat names, try to look governmental, and suggest that reverse mortgages NEVER require a payment. The terms of your loan require that you maintain homeowners insurance and pay your taxes. If you do not your loan can become due immediately.

All loans eventually require repayment to the lender. The reverse mortgage is no different in this regard. Your reverse loan will be due and payable when you no longer live in the home. Either you've moved, or deceased. At that time what ever money you've borrowed and the interest that accumulated is due. The remaining equity in your home is then passed on to your heirs or estate.

4. Immediately throw anything in the trash that says "Government Benefit" or "Guaranteed to Qualify". The reverse mortgage is not a government benefit nor does every senior home owner qualify. In fact, over the last two years many seniors who start the process find that they no longer have enough home equity to qualify due to declining property values.

5. When submitting your request through an online form make sure that your name will only be submitted to a single lender. This way you'll avoid the nightmare of somehow magically landing on every lenders call or mailing list by only requesting contact.