The government is taking steps to prevent reverse mortgage fraud

More homeowners ages 62 and older are beginning to take advantage of the many benefits of a reverse mortgage, including no monthly mortgage payments and access to their home equity. Unfortunately, as these loans become an increasingly popular form of financing, the ways in which older homeowners are scammed are becoming more diverse. The good news, however, is that the Department of Housing and Urban Development (HUD) is constantly finding new ways to detect and prevent reverse mortgage fraud so older homeowners are protected.

Funds provided for improved consumer protection

The new health care law has $777 million earmarked for programs aimed at preventing elder abuse and ensuring those responsible for mortgage fraud are punished fairly. This is great news for all the protection services that work every day to investigate cases of elder abuse and financial exploitation of elderly homeowners as they will receive special funding from the government. This money will provide an estimated 1,700 new elder abuse investigators with funds to start investigations and work towards preventing future fraud. A new Coordinating Council will also be formed that will recommend innovative ways to prevent elder abuse and reverse mortgage fraud among elderly homeowners.

Guide to warning homeowners about mortgage programs

The Financial Crimes Enforcement Network, along with HUD, has issued an advisory to warn elderly homeowners about common reverse mortgage schemes and fraud, as mortgage fraud is rampant both by financial institutions and, unfortunately, sometimes by family members. The guide explains the most common types of mortgage programs and lists potential red flags that homeowners and potential borrowers should watch out for, such as: B. Cross-selling and theft in payoff loans. Financial institutions have been asked to report fraudulent activity in their suspicious activity reports (SARS) so that HUD is aware of the issues and can take further action.

Knowledge is power!

The government is taking steps to prevent mortgage fraud and elder abuse, but homeowners can be proactive too. The best way for older homeowners to protect themselves from becoming potential victims of mortgage fraud is to become familiar with reverse mortgages and their requirements. A homeowner can do this by conducting personal research, seeking advice from a mortgage specialist, and attending a reverse mortgage counseling session with a HUD-approved financial advisor. The consultation will tell the homeowner what to expect from the loan and discuss the requirements so there are no surprises later.

Homeowners considering this type of financing should seek additional information from a loan specialist who can determine their eligibility, provide important information about the reverse mortgage, and answer any questions they may have. This type of loan can be a great financial solution for homeowners as long as they are well informed about the loan process so they don’t fall victim to a reverse mortgage scheme.