Typically, reverse mortgages are used as problem solvers, so borrowers do not want to compound their problems by being taken advantage of.

In the US, reverse mortgages have gone hand in hand with scams. From high-pressure and unscrupulous salespeople to con-artists ready to snap up the liberated equity in home improvement and investment scams, American reverse mortgage borrowers have been under siege, usually at a time when they most need help.

“Reverse mortgages are complicated and expensive financial products that must be used wisely and regulated carefully, or profit and volume driven sales efforts can open the door to abuses and fraud,” said Odette Williamson, a lawyer with the National Consumer Law Center: www.consumerlaw.org />                    
Since reverse mortgages can be arranged privately, there may not be anyone to protect your interests unless you insist on independent legal and financial advice to verify that the offer made for your equity represents the best choice for you.

How could you become victim to fraud or scams (for home equity conversion or anything) when you don’t consider yourself greedy or a financial “babe in the woods”?
•   Sales is professional persuation. The techniques and language used to persuade you to act against your best interests have been perfected over decades. Even trained salespeople can fall prey to their lure, so outside, independent advice is the best antedote.

•   Common sense is not so common. When a scam or fraud is explained after the fact, it is usually difficult to understand how any thinking individual could be taken in. Swept up in the heat of the moment, the pitches powerfully and logically overshadow common sense and logic. This makes independent advice, not common sense, the best line of defense.

•   Consider the source. Expect the worst and be proven wrong. Whether the contact is someone recommended by someone you know or someone you discovered online, don’t expect the best from them. Your contact may be a scam victim themselves. Get proof contacts are who they say and can deliver what they sat they say they can. Check with relevant professional organizations to verify credentials. Check with local police to see if this is an ongoing scam.

•   Don’t be pressured by one-time opportunities or deadlines. Be wary of signing confidentiality agreements that limit your freedom to seek independent advice. Ask for written information and agreements to share with those who have your best interests at heart.

•   Beware of easy money. Scams from seemingly-legitimate individuals that promise you great returns for the no-risk of a few thousand of your dollars—like the original Nigerian emails—have separated millions of dollars from their owners. Phone calls and emails announcing you’ve won a prize should also be vetted with police, especially any that ask you to send money so you can collect your prize.

•   Protect your information. Yeah, you’ve heard that before, but do you understand what needs to be protected? Yes, passwords and PINs, but there’s more. Your mother’s maiden name, your birth date, the three-digit number on the back of credit cards and your social insurance number can be the key to successful identity fraud. Protecting this information is a battle since businesses treat it so trivially and yet rely on it to determine if you are you.  

•   Does the lender or the salesperson representing the lender have fiduciary duty, that is a legal duty to act in your best interests? If not, why not? If so, get the details.

For more on protecting your interests and asking the right questions about reverse mortgages, read the preview pages of Reverse Mortgages offered by Catapult Publishing .



---------------------