Nassau County’s Seniors Face Growing Threat from Sophisticated Reverse Mortgage Scams Targeting Their Home Equity

Nassau County senior homeowners are increasingly becoming targets of sophisticated reverse mortgage scams that can result in devastating financial losses and even foreclosure. The increasing frequency of reverse mortgages has unfortunately meant that mortgage scams are also on the rise. Documented cases were up more than 1,300% from 1999 to 2008 according to the FBI. As we move through 2024, these predatory schemes continue to evolve, making it crucial for elderly homeowners and their families to understand the warning signs and protective measures available.

Understanding Reverse Mortgage Scams in Nassau County

Reverse mortgages are legitimate financial products that allow homeowners aged 62 and older to convert part of their home equity into cash. Unlike a traditional mortgage, where the homeowner makes payments to the lender, a reverse mortgage involves the lender making payments to the homeowner. However, scammers exploit seniors’ trust and financial concerns to manipulate these transactions for their own gain.

Many reverse mortgage scams — carried out by unscrupulous parties from financial advisors to contractors — can con seniors out of their home equity. Reverse mortgage scams are engineered by unscrupulous individuals through a multitude of real estate and financial services related companies to steal the equity from the property of unsuspecting senior citizens.

Common Scam Tactics Targeting Nassau County Seniors

Fraudsters employ several sophisticated tactics to target vulnerable homeowners in Nassau County:

• Foreclosure “Rescue” Schemes: Some scammers target older adult homeowners at risk of foreclosure since people in this situation may be desperate for help and not thinking clearly or doing due diligence. The scammers say the homeowners are eligible for foreclosure relief and can stop foreclosure using a reverse mortgage. They convince the homeowner to get a reverse mortgage to pay off their existing mortgage and therefore avoid foreclosure, but they charge high fees or closing costs or may steal the funds from the reverse mortgage altogether.
• Home Improvement Scams: Unscrupulous contractors or other home improvement vendors may unsolicitedly approach older homeowners, mention an issue with their house needing an immediate fix, and convince them to repair or remodel. They may suggest using a reverse mortgage as “free money” to finance the home project. The scammer may be unlicensed and inflate the cost of the project or may perform unnecessary, shoddy, or even damaging work to the home, pocketing payment from the reverse mortgage for their work.
• “Free Money” Claims: Beware of reverse mortgage lenders who offer you “free money” or are unable to clearly explain exactly how the loan will work. Scammers say that the reverse mortgage is free money, but it isn’t. The homeowner must still pay closing costs and other fees.

Red Flags to Watch For

Nassau County residents should be alert to these warning signs of potential reverse mortgage fraud:

• The scammer sends you an unsolicited offer.
• The scammer can’t clearly explain the loan or how it will work. The scammer says they’re the only lender or salesperson you should talk to.
• The scammer tries to charge you upfront fees, potentially even just for getting information.
• The scammer is pushy.
• Scammers might try to charge you thousands of dollars for information on reverse mortgages. However, this information is often available for free from HUD or other sources, like the Consumer Financial Protection Bureau.

The Devastating Impact on Victims

The consequences of falling victim to reverse mortgage scams can be catastrophic for Nassau County seniors. After the lump sum is paid out, the fraudster disappears with the money, and the senior is left with no cash or equity in the home. In some cases, the perpetrator will identify seniors who are at risk of losing their homes due to foreclosure. The perpetrator will scheme with a dishonest appraiser to inflate the value of the home and then obtain a reverse mortgage on the property. After the mortgage approval, the scammers have the senior transfer the title to them and the senior is left without a home and without the funds from the reverse mortgage.

Even when seniors believe they’re avoiding foreclosure through a reverse mortgage, they may still face significant risks. The homeowner is responsible for paying property taxes, insurance premiums, and home maintenance expenses. Homeowners who cannot keep up with the still-existing payments face reverse mortgage foreclosure.

Nassau County’s Response to Mortgage Fraud

Nassau County has seen significant mortgage fraud cases that have devastated local communities. A Chapter 7 bankruptcy case was recently filed for an individual who was victimized in the largest mortgage fraud and ID theft scheme in Nassau County’s history. Nassau County’s investigation, dubbed “Operation: Sweet Deal,” involved more than 45 independent acts of fraud.

HOPP funding helps hire, train and retain competent, compassionate employees who are able to continue their work challenging fraud, deed theft, loan modification and partition scams, and who challenge predatory and discriminatory lending and abusive mortgage servicing practices that disproportionately impact New York’s most vulnerable communities—seniors and people of color.

Legal Protection and Professional Help

When facing potential foreclosure or suspicious mortgage offers, Nassau County residents have access to experienced legal professionals who can provide crucial protection. The Law Office of Ronald D. Weiss, P.C., located in Melville, has been supplying expert bankruptcy, foreclosure defense, and debt negotiation services since 1993. They offer practical, compassionate solutions customized to each client’s financial situation.

For homeowners facing foreclosure threats, a qualified Foreclosure Lawyer Nassau County can provide essential legal defenses and explore alternatives to save the home. Their foreclosure defense gives Suffolk and Nassau County homeowners more time and bargaining power when seeking loan modifications and other mortgage help. What makes them different is that they don’t just defend against foreclosure in court – they also explore negotiation, loan modification, and bankruptcy options to help clients keep their homes.

Steps to Protect Yourself

Nassau County seniors can take several protective measures to avoid becoming victims of reverse mortgage scams:

• Federal law requires a senior to receive counseling from a qualified reverse mortgage counselor before applying for a reverse mortgage. To find qualified counselors, visit the Department of Housing and Urban Development’s website www.hud.gov or call the housing counselor hotline at 1‐800‐569‐4287.
• One of the best ways to avoid reverse mortgage scams is to shop for your reverse mortgage with a few different lenders and to speak with a HUD-approved housing counselor.
• Do not respond to unsolicited calls or advertisements about foreclosure relief.
• If you do not understand why you are signing papers talk, with a trusted friend, attorney, of other family members. Let your counselor know if you feel pressured to take out the reverse mortgage.

Reporting Suspected Fraud

If you suspect you’ve been targeted by a reverse mortgage scam, take immediate action. If you think you’ve been a victim of a reverse mortgage scam, file a complaint with the Federal Trade Commission on its reporting website or by calling 1-877-FTC-HELP. You can also file complaints with your local FBI field office, your state Attorney General’s office or your state’s banking regulatory authority.

Report the fraud to the Federal Trade Commission. You can report the scam at HUD’s fraud reporting link if the reverse mortgage was an FHA-backed loan. If you suspect reverse mortgage fraud, submit a complaint about the company through the Consumer Financial Protection Bureau.

Conclusion

As reverse mortgage scams continue to target Nassau County’s senior population, awareness and vigilance remain the best defenses. A reverse mortgage can be a valuable financial tool for seniors in Nassau County, offering a way to unlock home equity and provide financial stability in retirement. However, it’s essential to carefully consider the costs, benefits, and potential impacts on heirs before making a decision.

When facing financial difficulties or foreclosure threats, consulting with experienced legal professionals who understand both bankruptcy and foreclosure law can provide crucial protection and explore all available options to preserve homeownership and financial security.