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, 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 some cases, the victim may get a lump-sum payment in the mortgage scam but is then evicted by the scammer after signing the documents. In other cases, the con artists manipulate seniors to sign a deed and become the legal owner of a particular property, normally owned by an investor involved in the scheme. Shortly after, the scammers convince the senior to take out a reverse mortgage so they can steal the loan money.