Reverse Mortgage Scams

Avoid Reverse Mortgage Scams

"Scam Alert" written in white text against red background with white exclamationsReverse mortgages are a special type of home loan that lets homeowner's convert the equity in their home into cash.

If you are interested in a reverse mortgage, beware of scam artists.

Our HUD-certified housing counselors offer objective support and provide free tools and resources to navigate the reverse mortgage process, recover from reverse mortgage scams and assist you with achieving financial wellness.

How the Scam Works

Being charged for reverse mortgage information

Scam artist will try to charge you for anything. Do not pay for any type of reverse mortgage information, brochure, or calculations of what you can qualify for.

Reverse Mortgage Counselors with hidden agendas

Another wonderful protection feature for seniors is the requirement for the borrower(s) to have an appointment with a HUD approved Reverse Mortgage Counselor, like LSS. A counselor should never partner with other reverse mortgage lenders or financial service individuals, nor should they try to push you into their products or services. If this happens to you, report it to HUD immediately, also inform the company/lender you are working with to also report it.

Reverse mortgage foreclosure flipping

The scheme begins with an investor buying a foreclosed home for below market value. The "investor" then arranges for a bogus sale of the home to a senior who immediately takes out a reverse mortgage at an inflated value. The senior pays back the investor and owns a home that they have paid nothing for.

Reverse mortgage repair scams

Due to a strict FHA appraisal, a Reverse Mortgage may require repairs made to the property before you can close on your reverse mortgage. Make sure you find exactly what needs to be repaired by the appraiser. Here is what you need to watch out for. Some companies will also offer home improvements or repairs through a recommended contractor. Most likely, the contractor is aware of the scam and charging exorbitant prices for his or her services. 

To report fraud or abuse in the reverse mortgage program, contact your local homeownership center.

Contact Us & Get Started

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Our HUD-certified housing counselors can offer impartial education and guidance to help you understand the pros and cons of obtaining a reverse mortgage and assist you if you have been affected by a scam. 

We have counselors who are fluent in Spanish and Hmong. In addition, American Sign Language (ASL) interpretation is available as needed.

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LSS Financial Counseling