In recognition of National Senior Citizens Day, the New York Department of State’s Division of Consumer Protection is issuing important guidelines to help older adults steer clear of financial scams, particularly those involving reverse mortgages.
The Division’s bulletin emphasizes that while reverse mortgages can be legitimate, they are also a common target for scammers. “Not all reverse mortgages are scams, but fraudsters may pose as lenders to pressure individuals into signing contracts,” the bulletin warns. Common tactics used by these scammers include unsolicited offers, lack of clear explanations about the loan terms, discouraging consultations with other lenders, and pressuring individuals to sign documents without fully understanding them.
In contrast, reputable reverse mortgage professionals encourage open discussions with other trusted sources, such as family, friends, and financial advisors, about the implications of taking out a reverse mortgage. The U.S. Department of Housing and Urban Development (HUD) mandates that any reverse mortgage under the Federal Housing Administration (FHA)’s Home Equity Conversion Mortgage (HECM) program, which comprises most reverse mortgages in the U.S., requires mandatory counseling.
The bulletin also directs seniors to resources provided by the Consumer Financial Protection Bureau (CFPB) for further information. “Don’t rush into any decisions or assume a potential lender knows what’s best for you. Conduct your own research and compare offers from multiple lenders,” it advises. The CFPB website offers comprehensive details on how legitimate reverse mortgages operate.
Additionally, professionals in the reverse mortgage industry have played a crucial role in identifying and thwarting scams. For example, earlier this year, a reverse mortgage expert’s swift action helped prevent a suspected fraudster from financially exploiting an elderly Canadian, leading to the suspect’s arrest.
By staying informed and cautious, seniors can better protect themselves from fraudulent schemes and make more secure financial decisions.
