The U.S. Department of Housing and Urban Development (HUD) Office of the Inspector General (OIG) has issued a new fraud bulletin aimed at informing the public about reverse mortgage scams, a revision to a previous bulletin that noted increased interest in the product category due to the ongoing economic impacts of the COVID-19 coronavirus pandemic.
The bulletin, issued earlier this week, describes for people that reverse mortgages are legitimate products offered under the Federal Housing Administration (FHA)’s Hoe Equity Conversion Mortgage (HECM) program, but bad actors may seek to scam a senior out of money under the guise of offering a reverse mortgage on their home.
“Reverse mortgage borrowers can default if they violate conditions of the mortgage, such as
when a borrower fails to pay property taxes or homeowners’ insurance, no longer occupies the home as a primary residence, or has not kept the home in good repair,” the bulletin reads. “HECM borrowers may become targets of schemes designed to take advantage of those seeking reverse mortgages.”
As a product that is aimed at the protected class of seniors — a cohort that has historically been a target of financial scams — fraudsters can often seek out seniors who may be receptive to learning more about a reverse mortgage and take advantage of a resulting scam opportunity.
Common reverse mortgage scam profiles
Perpetrator profiles of reverse mortgage scammers can vary, but the OIG…
