Blog
July 16th, 2009

HUD/FBI Warn Seniors of Reverse Mortgage Fraud

by

 

The Department of Housing and Urban Development (HUD) along with the Federal Bureau of Investigation (FBI) has issued a special warning for homeowners over the age of 62. With the number of reverse mortgages, also know as Home Equity Conversion Mortgages (HECMs), drastically on the rise, the opportunities for fraud are immense.

“According to HUD, the number of HECM loan originations insured by the Federal Housing Administration rose from 7,923 in fiscal year (FY) 1999 to 112,013 in FY 2008, representing an increase of more than 1,300 percent. HUD-[Office of Inspector General]OIG anticipates that the number of HECM originations will rise significantly in 2009 due in part to an increase in HECM loan limits from $362,790 to $625,500. The increasing senior victim population –– currently worth $4 trillion in home equity and estimated to grow by 10,000 people per day through 2011 –– coupled with program vulnerabilities, such as the lack of income, credit, or employment qualifications, creates significant opportunities for fraud perpetrators.”

The FBI says the fraud is engineered to eliminate a homeowner’s equity, or use seniors unwittingly to steal equity from flipped properties. Legitimate reverse mortgages are insured by the Federal Housing Authority (FHA).

HUD and the FBI have this advice for senior homeowners:

  • Do not respond to unsolicited advertisements.
  • Be suspicious of anyone claiming that you can own a home with no down payment.
  • Do not sign anything that you do not fully understand.
  • Do not accept payment from individuals for a home you did not purchase.
  • Seek out your own reverse mortgage counselor.
  • If you are a victim of this type of fraud and want to file a complaint, please submit information through our electronic tip line or through your local FBI office. You may also file a complaint with HUD-OIG at www.hud.gov/complaints/fraud_waste.cfm or by calling HUD’s Hotline at 1-800-347-3735.

WalletPop.com also suggests reading up on AARP’s advice.

Share and Enjoy:
  • email
  • Print
  • RSS
  • Add to favorites
  • Yahoo! Bookmarks
  • Facebook
  • Twitter
  • Technorati
  • Digg
  • del.icio.us
  • Google Bookmarks
  • StumbleUpon
  • Yahoo! Buzz
  • Mixx
  • BlinkList
  • Live
  • Reddit

Leave a Comment

Receive Updates via Email

Delivered by FeedBurner

About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

Our bloggers:

Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

Connect With Us

  • rss feed icon
  • facebook icon
  • twitter icon

Compare Lowest Mortgage Rates

$