Hello Everyone,
Evelyn here,
with Consumer advisory from the Office of The attorney General Bill McCollum.
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ONSUMER ADVISORY
January 24, 2008
McCOLLUM: SENIORS SHOULD BE WARY OF REVERSE MORTGAGES SCAMS
TALLAHASSEE, FL – Attorney General Bill McCollum today issued a
consumer advisory warning Florida’s senior citizens about a
mortgage-related scam that may target them directly. As he unveiled
legislation this week to combat mortgage “foreclosure rescue” scams, the
Attorney General also cautioned senior citizens about scams associated
with reverse mortgages, a type of home equity loan frequently abused by
con artists and scammers. These loans are often popular options for senior
citizens because they offer a cash source which can help meet unexpected
medical expenses, supplement social security and more.
“When our senior citizens are concerned about finances and are
seeking a legitimate option for financial relief, they should not have to
worry about predatory lenders or brokers trying to capitalize on their
precarious position,” said Attorney General McCollum. “Consumers should
take every precaution to avoid scams and situations which could leave them
in even worse financial shape.”
Reverse mortgages are a special type of home loan that allow
homeowners who are 62 and older to borrow against their home equity
without having to repay the money until the home is sold or the borrower
passes away or moves out permanently. When the home is sold, lenders
recover their principal plus interest. The remaining value of the home
goes to the homeowner or to his or her survivors.
Unfortunately, as the popularity of reverse mortgages grows, so does
the potential for fraud. Predatory lenders, unscrupulous loan agents and
dishonest brokers may target senior citizens who may be anxious about
their financial security. Deceptive practices and allegations of
high-pressure sales tactics are being more frequently encountered as
senior citizens are being taken advantage of under the guise of a helpful
and legitimate reverse mortgage. Borrowers also run the risk of being
steered into inappropriate loans and annuities by sales agents and
insurance brokers who could be working together without disclosing that
relationship to the borrower.
Attorney General McCollum noted that reverse mortgages can serve a
purpose when financed through legitimate lenders. According to the U.S.
Department of Housing and Urban Development (HUD), homeowners who take out
a reverse mortgage can receive payments in a lump sum, on a monthly basis,
or on an occasional basis as a line of credit. Homeowners whose
circumstances change can restructure their payment options.
HUD-approved housing counseling agencies are available for free, or
at minimal cost, to provide information, counseling, and free referral to
a list of HUD-approved lenders. HUD does not recommend using an estate
planning service or any service that charges a fee just for referring a
borrower to a lender. This information can be obtained by calling HUD at
1-800-569-4287. More information is available at HUD’s reverse mortgage
website at http://www.hud.gov/buying/rvrsmort.cfm.
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Evelyn out.
