Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
Problems selling a home are plaguing homeowners, but it’s not the only issue facing the housing market. If you’re a senior and you own your own home, you are more likely to be targeted for a home-related scam, according to the FBI.
And with the number of reverse mortgages (also known as a home equity conversion mortgage (HECM) increasing more than 1,300 percent between 1999 and 2008, there are significant opportunities for those inclined to perpetrate a home-related fraud.
I had the chance to speak with Peter Bell, president of the National Reverse Mortgage Lenders Association (NRMLA), and ask him about reverse mortgage scams. According to Bell, these scams generally involve people who look to “basically defraud the seniors out of the money after they have the reverse mortgage. Very few are related to getting the actual mortgage.”
Unfortunately, in the majority of cases, these scams involve someone related to the senior.
The FBI reports that in many of these reverse mortgage scams, victim seniors are offered free homes, investment opportunities, and foreclosure or refinance assistance. Seniors are frequently targeted through local churches and investment seminars, as well as television, radio, billboard, and mailer advertisements.
The elderly are also used as “straw buyers” in property-flipping scams, Bell explains.
“For example, there was a property-flipping scheme where a group recruited seniors who didn’t have homes and put them in homes. They told each one of them to get a reverse mortgage, and then the group took the money,” he adds. The senior borrowers were left with no money, no home, and ruined credit.
So how do you prevent yourself or a loved one from becoming the victim of a reverse mortgage scam?
Look for the following reverse mortgage red flags:
1. The lender doesn’t allow you to choose your own reverse mortgage counselor. Every HECM borrower is required to go for counseling before he or she can actually apply, and the lender must provide a list of sources that offer this counseling. According to Bell, “if the scam is occurring in conjunction with a reverse mortgage, the lender can’t afford for people to go to legit counseling. So they’ll make them go to a counselor they choose.”
If you’re not given a list of around ten sources for reverse mortgage counseling, the lender could be trying to scam you by sending you to a counselor who is involved in the scheme.
2. The lender gives you options but offers to make the appointment for you. The lender must give you options, but you are responsible for making the appointment on your own. Both Bell and the FBI suggest you seek out your own mortgage counselor, whether from the lender’s list or not.
Be wary if the lender tries to make the appointment for you. The lender giving you the list of reverse mortgage counselors makes it seem like he or she is giving you a choice in counselors, but making the appointment for you could be another way the lender assures you go to the counselor of his or her choice.
3. The lender tries to take your money right away. According to Bell, “lenders can talk to a prospective client, get them interested, and can take preliminary information, but [they] cannot begin to formally process an application or obligate the senior to any cost without the senior making a counseling appointment.” Seniors are required to attend a reverse mortgage loan counseling appointment and return a certificate of attendance signed by both the counselor and the prospective client.
4. It’s not clear who is insuring the HECM loan. The Federal Housing Administration (FHA) backs all legitimate HECM loans. If you don’t see that agency’s name anywhere, that’s a huge red flag.
Remember, the best way to avoid being scammed is to keep asking questions until you’re satisfied you’re getting a straight answer. And if you don’t understand how your reverse mortgage works, don’t sign any documents until you get enough information.
For more information, check out the FBI’s in-depth bulletin with tips for avoiding reverse mortgage scams.
Read more about how to protect yourself from identity theft and protect your credit score from Equifax.
Winter Home Maintenance and Weatherproofing Tips
Selling Your Home: Low Appraisal Options
Where Have All the Buyers Gone?
Buying A Home: Estimated Closing Costs
Hidden Benefits of Buying a Home
Housing Market Predictions: More Foreclosures on the Market
Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.