Reverse Mortgage Broker Goes to Prison for Scamming Woman

A reverse mortgage broker from California received a six-year prison sentence after scamming a woman out of her reverse mortgage proceeds. John McTaggert helped an 86-year-old woman close on a reverse mortgage, then deposited the funds into his own bank account, according to Reverse Mortgage Daily.

The broker led the woman to believe the money was being invested in annuities. After he deposited the money in his account, he sent her $500 “dividend” checks each month. She became suspicious when she noticed that the checks were coming directly from the reverse mortgage broker and not an insurance company.

The case isn’t isolated and highlights the potential for various types of reverse mortgage fraud. Here are some of the reverse mortgage scams to watch out for:

• Getting seniors to pay for information that is actually provided free by the Department of Housing and Urban Development (HUD). It’s not uncommon for seniors to be charged 6% to 10% of the amount borrowed for a reverse mortgage as part of an estate planning program.
• Stealing home equity from seniors. This may involved flipping homes and using seniors to pose as straw buyers, or people who apply for a reverse mortgage to take out all the equity before the home is then resold to another buyer.
• Some equity-stripping schemes involve offering free homes to seniors or foreclosure assistance to supposedly help them stay in their homes. Many times these scams are targeted at people through churches, investment seminars, TV and radio ads, or direct mail, according to the Federal Bureau of Investigation.

To avoid being taken in by fraud, always be skeptical of claims that sound too good to be true. Avoid doing business with companies you’ve never heard of or who contact you and pressure you to sign up for their products on the spot. Never sign documents that you don’t fully understand. Have an attorney review the paperwork with you if necessary.

This entry was posted on Monday, January 18th, 2010 at 3:41 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.