Reverse Mortgage Scams

Reverse Mortgage Flipping Scams

Found this on ReverseMortgageGuides.org, and I am sure this is one of the newest scams since the recent legislation that allows seniors to use a reverse mortgage to purchase property.

Scam: flipping a foreclosed home with a reverse mortgage
The scheme begins with an investor buying a foreclosed home for below market value. The "investor" then arranges for a bogus sale of the home to a senior who immediately takes out a reverse mortgage at an inflated value. The senior pays back the investor and owns a home that they have paid nothing for.

So everyone wins? No. The FHA is guaranteeing the reverse mortgage which means that if a reverse mortgages is set up using a phony property value, the taxpayers will end up paying out the difference to the lender when the home eventually gets sold for less than the balance of the reverse mortgage.

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, know that this is likely fraudulent.

Other Reverse Mortgage Scams

Being Charged for Reverse Mortgage Information - Do not pay for any type of Reverse Mortgage Information, brochures, or calculations of what you can qualify for. Read more...

Shady Reverse Mortgage Counseling - Beware of Reverse Mortgage Counselors with a hidden agenda. Read more...

Reverse Mortgage Repair Scams - Repairs may be required to complete a reverse mortgage, however be wary of who you choose to do the work. Read more...