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Reverse Mortgage Lenders Allegedly Prey on Seniors

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Chicago, ILFor some seniors, the money offered through a reverse mortgage can be a lifesaver. People living on a fixed income might not have enough money to make ends meet in the case of illness or injury, so money obtained from a reverse mortgage lender can seem like the ideal solution. Unfortunately, some reverse mortgage lenders are accused of unethical tactics, including misleading seniors about the risks associated with a reverse mortgage so they experience a reverse mortgage default and their home is foreclosed.

Reverse mortgages are offered to senior citizens as a way to access money in the value of their homes. The terms of a reverse mortgage mean the senior does not have to pay back the loan until her or she either moves out or passes away, although the homeowner is still responsible for paying insurance and taxes.

Some seniors allege, however, that reverse mortgage lenders use aggressive and misleading tactics in marketing the program. For example, some lenders are accused of marketing the loans to seniors who cannot afford the fees associated with reverse mortgages. Other lenders are accused of marketing the loans as "free money" to be used to finance cruises and vacations.

In some cases, lenders are accused of putting the older spouse on the deed and pressuring the younger spouse to keep her name off the deed. When the person listed on the deed passes away, the remaining person is left to either pay off the reverse mortgage or face foreclosure. Some widows say they were never told they could face foreclosure if their husband died.

Meanwhile, some lenders are accused of telling seniors they will not lose their home, even if they default on the reverse mortgage. Furthermore, seniors may not realize that if they take out a lump-sum loan the interest charges are added monthly. By the end of the loan, the amount owed can be more than double the value of the original loan. Making the situation worse is that, according to a report by the Consumer Financial Protection Bureau (6/28/12), seniors are taking out reverse mortgages at a younger age, increasing the amount of time interest adds up on the loan.

Officials are now working on rules to ensure seniors are better informed about reverse mortgages before they take out a loan, but for some seniors, those regulations may come too late. Already seniors face foreclosure on their homes—homes that were already paid for.

"Reverse mortgages are inherently complicated products that are not easy for the average consumer to understand," the Consumer Financial Protection Bureau concluded in its report to Congress. "Consumers particularly struggle with the rising balance, falling equity nature of the loan. Recent innovation and policy changes have increased the complexity of the choices and tradeoffs consumers have to make when deciding to take out a reverse mortgage loan."


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Posted by

I would NEVER recommend a reverse mortgage to anyone if the loan is to be serviced by NOVAD. My mom had a reverse mortgage on our home. She passed away, and I have been attempting to refinance with another company to pay off their loan and allow me to stay in my home. NOVAD has absolutely refused to negotiate the payoff so that I will have enough money for the new loan. I consulted a certified HUD counselor and was advised they could negotiate. Their Foreclosure Specialist is totally without a heart, she has been rude, and she is totally lacking in knowledge. I have been given different, and usually wrong, information repeatedly. From last week to this week, the payoff has increased another $2000. I am alone, I'm 72 years old, and NOVAD wants to kick out of my home and into the streets. What am I supposed to do???

Posted by

I did this reverse mortgage through Novad Management Consulting, they promised me money to pay bills and other debts as a Reverse Mortgage advertises and states they would.
I had to pay them thousands of dollars to be able to get the property on their reverse mortgage program. It’s been a few years and I have not been given a check or nothing from them, then I call them about the money they owe me and the week after that they send me this letter saying they will foreclose my property for reasons that is false and not applicable.
I called them and tried to talk, and they are so disrespectful and will not respond to my phone calls.
They threatened me with wrongful foreclosure and violations of RESPA & FDCPA
I am an 82-year disabled vet, I feel like this company took advantage of me and my lack of intelligent of reverse mortgages told me one think and did the other and now getting these harassing letters.
I want my property back from them, they did not do what they said they will do and I feel like the contract I sign was filled with false promises. This company is a SCAM…

Posted by

Am in the process of ReverseMortgageFunding for income help, 68yo, in Va. RMF is in NY. Same laws apply for Hecm Loc? Home paid for, home appraised now @ $112,500 in April was 110,000. Do prices usually rise this rapidly? Would like you to look at amort sched i will get tomoro. Thanks.

Posted by

I need assistance also. Reverse Mortgage company put me in foreclosure because we didn't pay $7000 dollars owed for insuring this house. We are trying to repay the money by working on a repayment plan and they are not working with me.

Posted by

I have a long time neighbor who is in sincere question of what she can do with a reverse mortgage , she's being told she can stay in her home , of over 35 years , till she's told to leave .

Posted by

Champion Mortgage has been harassing my 87 yr, father since February 2014. I have printouts of his tax payment history from the City of Detroit. They have been leaving official letters in his door stating his house is up for foreclosure for delinquent property taxes because they are paying his taxes and so is he. They now say my father owes them 922.28. However, the City of Detroit's reps and statement says Champion Mortgage received two checks from the City of Detroit. I have spoken with several reps from this company and they put me on hold and keep telling me they are researching. They finally admit they received the two checks, but now he supposedly owes money from 2013 taxes. The City says they only made two payments, which those are the checks they recieved back. 87 with Congestive Heart Failure and has been in his home since 1952. Before I started investigating, I paid 150.00 on his so called repayment plan so they would leave him alone, until we could get to the bottom of this. They are scaring him to death. He now suffers anxiety attacks and his full awareness is focused on losing his home. This has got to be illegal. Is there any recourse for their actions?

Posted by

Realtor and his agent took my under age wife off deed with quit claim deed.They told us that we could get her back on deed by getting another quit claim after she reached 65 .They also told us this was possible as Florida was a community property state.


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