One of the most targeted demographics for scammers and con men is that of the elderly. There are a number of ways that scammers target senior citizens, such as through health care fraud, counterfeit prescription drugs, funeral/cemetery fraud, and also through real estate. One of the more common methods of fraud in the last few years has been reverse mortgage scams. But what is a reverse mortgage, and how do scammers take advantage of them?
What is a Reverse Mortgage?
Designed to convert the equity in a home, reverse mortgages allow elderly homeowners to supplement their social security and other forms of income. In order to qualify for a reverse mortgage, a person must be at least 62 years of age. There must also be enough equity in the home. Applicants may be able to receive a reverse mortgage even if money is still owed on a current mortgage if certain requirements are met.
How Reverse Mortgage Fraud Works
Two of the most common types of mortgage fraud that occur are equity theft and foreclosure rescue.
- Equity Theft: In cases of equity theft, the scammer purchases a home/property that is in distress, has been abandoned, or is in foreclosure. The property is then sold to a senior citizen, and a reverse mortgage is taken out after he/she has occupied that property for 60 days. The scammer will then steal the proceeds of the loan after the transaction is completed.
- Foreclosure Rescue: Senior citizens who are at risk of foreclosure on their homes are primary targets for foreclosure rescue scammers. There are a variety of ways these perpetrators can execute their deception. Some may set themselves up as real estate attorneys and claim that they can negotiate with your lender to reduce mortgage payments for a fee. Others claim to be forensic loan auditors or foreclosure prevention auditors. These phony auditors will offer to have an expert or attorney review mortgage documents to determine whether or not the lender is complying with the law.
At Colorado Real Estate Company, we want to you to feel safe and secure in your home. If you have questions or concerns about your mortgage or reverse mortgage options in the Denver Metro area, don’t hesitate to ask! We are happy to assist you in all of your real estate needs.