For their victims, the phone call sounded like salvation. Seniors, living on a fixed income and having trouble with the bills, they were glad to hear someone offering them a reverse mortgage that would allow them to turn the equity in their house into cash. But the four mortgage professionals charged with perpetrating a $2.5 million reverse mortgage fraud scheme are anything but angels. Their aftermath has left those who signed up with them impoverished and close to foreclosure.
The Miami Herald reports that the way it allegedly worked is that the mortgage professionals would call up the seniors - they only called seniors - and pitch them a reverse mortgage insured as an FHA loan. After they agreed and filled out the paperwork, the four conspired to have the homes appraised at many multiples of their value. In one case, a $31,000 condo got a value of $275,000. They then got the inflated reverse mortgage approved and staged a fictitious short sale, diverting the difference between the reverse mortgage amount and the short sale into their personal accounts, without ever paying off the existing mortgage. Falsified documents were used to hide the scheme from the lender and from the government.
A Note to Our Readers –
Reverse mortgages can be a beneficial tool to many seniors. However, if you are looking into one (for yourself or a family member), be sure to investigate them thoroughly. Make sure they have all necessary federal and state approvals. What can be a blessing in your golden years can also be a disaster if not handled properly. – Ed.
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