Reverse mortgage industry has suffered from money hungry con artists who take advantage of the elderly by taking their reverse mortgage money, identity, or by selling products/services, which they don’t need including annuities or insurance products after they receive their funds.
The actual program is a safe government insured program for seniors – the program has been around for 22 years – most of the cons involved with the program have to do with sales people who take the seniors funds after they receive the reverse mortgage.
We will be updating this page with all the latest information on the current cons in the reverse mortgage industry. We want the public to be safe from Con artists, brokers who charge excessive fees, and those who steal your personal information.
Common cons or scams involved with a reverse mortgage loan
§ Stealing of personal information
§ Not really a lender but acting as if one
The current economy is allowing for con artists to prey on seniors who need financial assistance. Seniors who need reverse mortgage advice should avoid telemarketers or pushy sales people who are only trying to sell their product/service.
1. The reverse mortgage is a loan – this can be viewed as a con – it is not free money – the interest rate that the banks charge will be added to the loan – while you don’t have any monthly mortgage payments you will be responsible for this when you either sell the home or pass away.
2. The media says that their are high fees – we like to disagree as most of the fees are standard in the mortgage industry – the only fee which is excessive is the 2% mip (mortgage insurance premium) which goes to the government to protect lenders and borrowers alike. This is mandatory and everyone has to pay this fee.
3. You cannot take out the whole equity (100% of the equity) the banks will only allow you take up to 70% of the equity available – this is done to reduce the risk that the bank takes on. Not really a con but something that potential borrowers need to know.