Lessons In Reverse Mortgage Fraud
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The following tale of predatory lending holds some valuable lessons for seniors considering a reverse mortage. The story originates from the Sacremento News 10 website.
A Sacramento area man was arraigned Thursday on charges stemming from an elaborate reverse mortgage scam in which an elderly woman lost more than $40,000.
Michael Morales, 47, was officially charged with theft from an elder and grand theft.
According to prosecutors, Morales and another man, 62-year-old William Patrick, stole money from an elderly woman as part of a real estate scam. Patrick approached the women about getting a reverse mortgage and then forged her name to get money from the account, investigators said. They also accuse Patrick of stealing a check from the victim’s home and passing worthless checks on the pretense of repaying the stolen check.
Morales was introduced to the victim as a handyman who had to make repairs on her home before the reverse mortgage could go through. He is accused of overcharging the victim for repairs made on her home by a third party and pocketing the extra money.
Patrick is scheduled to appear in court on March 14. He is being held on $100,000 bail.
Lesson 1: Be wary of anyone (even family members) pushing the “idea” of a reverse mortgage on you. Do your own research and make sure a reveverse mortgage makes sense for you. Trusted family members and friends can certainly be helpful, but it is your money at stake and, ultimately, your responsibility. Be especially wary of anyone who tells you that they’re your only hope for getting a reverse mortgage.
Lesson 2: Use reverse mortgage counseling to your advantage. A face-to-face meeting with a counselor is always advisable. Discsuss with the counselor the need for repairs and the best way to get the repairs done.
Lesson 3: If repairs are needed to qualify for a reverse mortgage, get quotes from several contractors and always check references.
Lesson 4: Never sign any document that has blanks to be filled in later.
Reverse mortgages have more built-in borrower safeguards than most types of loans - such as mandatory counseling requirements. Still, when unfortunate situations like this occur, it shows that no amount of safeguards or regulations can totallly insulate the borrower from predators.
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