Six types of reverse mortgage scams exist. The seventh type is reading an article that promises to protect you from the first six.
The piece offers three lenders you can trust. Trust is doing a lot of work in that sentence. These are reverse mortgage lenders. Their entire business model requires you to sign over your house in exchange for monthly checks that stop the moment you die or move out. The trust part comes in when they don't also steal your kidneys.
Reverse mortgages are financial products designed for people who own a home but have no money. The scam version is designed for people who own a home, have no money, and also can't read. The difference between the two is a pamphlet from HUD and maybe a slightly lower interest rate.
The article lists scams like contractors who offer to help you get a reverse mortgage to pay for home repairs you don't need. This is brilliant. Convince someone to borrow against their house to fix their house so you can pocket the difference. It's a self-eating waterfall of stupidity that somehow flows uphill.
Another scam involves strangers offering to help you invest your reverse mortgage proceeds in sure-thing opportunities. The sure thing is that you'll lose the money. The opportunity is for the scammer to buy a jet ski.
Here's the tell: if you need an article explaining how to avoid reverse mortgage scams, you are already the target demographic for reverse mortgage scams. The Venn diagram is a circle. Reading the article doesn't move you out of the circle. It just makes you a more informed victim.
The three trusted lenders are probably fine. They'll take your house legally. They'll file the paperwork. They'll smile during the closing. Then your kids will inherit nothing but a framed photo of a house someone else owns, and a lingering suspicion that maybe Grandma should've just moved to Florida and rented.
Photo by Precondo CA on Unsplash
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