The reverse mortgage product can be a great option for today’s seniors looking to supplement their retirement income. As the program has grown in popularity so has the amount of people scamming seniors.  Seniors that fall for the scam ultimately end up in the situation they were trying to avoid. The following information will help you spot a reverse mortgage scam and avoid becoming a victim of a reverse mortgage scam.

Charging for free information – Many reverse mortgage companies offer free information to clients to review in their own home. Scammers will try and charge a fee for this information. If a reverse mortgage company is offering you information for a fee, do not give them any personal information.

Not letting you select your own HUD approved reverse mortgage counselor – One of the steps to receiving a reverse mortgage is going through HUD-approved reverse mortgage counseling. Legally, lenders are not allowed to recommend or steer clients to a certain counselor or counseling service. If the lender you are working with is steering you to one particular counselor, they may be trying to scam you.

The lender may even try to make the counseling appointment for you. Reverse mortgage lenders are legally not allowed to make your counseling appointment for you. When they make the appointment for you they could be sending you to someone who is in on the scam and will try everything to convince you to move forward with this company for the reverse mortgage. This is not how counseling works.

Unclear documentation – The Federal Housing Administration (FHA) backs all legitimate HECM loans. If your paperwork for your reverse mortgage does not have any information about the FHA, don’t sign any documents. If your documentation ever looks unclear or incomplete do not sign any of the paperwork because it could be a scam.

Pushing for a reverse mortgage – Some companies involved in annuities or insurance products will convince people to go forward with a reverse mortgage to make these purchases with the proceeds from the reverse mortgage.  Remember the proceeds from your reverse mortgage are to be used at your discretion. You should never feel pressured to purchase a product (like an annuity) with the proceeds unless you have consulted a financial advisor.

Make sure you understand all the terms and conditions with the reverse mortgage loan – A reverse mortgage is an important financial decision. Be sure you understand all the terms of the loan. Many scammers will inform you that you do not have to pay for taxes and insurance. Paying taxes and insurances is part of your responsibilities with a reverse mortgage. Some scammers will go as far to say that taxes and insurances are payable to them. Your taxes and insurances will never be paid to the reverse mortgage company. These are things you continue to pay the same way you have before the reverse mortgage.

You have time to change your mind – Remember you have three business days after signing the loan document to cancel it for any reason.  This is called the right of rescission. If the company you are working with does not give you the right of rescission, the company is likely scamming you.

If you believe a reverse mortgage company is operating illegally let your State Attorney General’s office or banking regulatory agency know about the company. You can also report the company to the Federal Trade Commission (FTC). You can do that online at or by phone at 1-877-FTC-HELP (1-877-382-4357).  If you are ever unsure about a financial decision consult a reputable financial advisor. Be sure to do your homework and search a company before going forward with a reverse mortgage to make sure it makes sense for your financial goals.