5 mortgage scams
Steer clear of reverse mortgage scams
Elderly homeowners are easy targets for scammers. They are more vulnerable and more likely to have equity in their homes.
Fraudsters engineer several types of reverse mortgage scams. Reverse mortgages allow homeowners who are 62 or older to borrow against the equity in their homes without having to make monthly mortgage payments. Normally, the scammer wants to steal the equity in the home or use the senior citizens as straw buyers and borrowers.
"They use sleek marketing campaigns," says Chris Moessner, formerly president of Moessner & Associates, a research firm in Washington, D.C. "They'll say 'we'll allow you to keep your house and you'll be able to pay your bills, but this is the easiest way for you to get cash when you need it.'"
In one scam, con artists recruit an innocent senior to be the fall guy in the fraud. The scammers buy a distressed property, then manipulate the senior into signing the deed, taking ownership of the house. Once the house is in the senior's name, the scammers use an inflated appraisal to get a reverse mortgage. They steal the money, and the senior and the lender get stuck with the loss.