Though we always want to expect the best of new acquaintances, it’s becoming increasingly common for seniors to find themselves victims of people they thought were trustworthy. While that’s certainly more the exception than the rule, senior citizens have become a favorite target of many of today’s scam artists. The new senior housing bubble is a primary focus of those trying to cheat seniors out of the money they’ve worked so hard to save up, and there are several other types of scams and fraud that these predators rely on.
Are Seniors Easy Targets?
As someone brought up in the 30s, 40s, and 50s, many of today’s older adults were raised to behave a certain way— to show respect and be polite in all situations and to believe that honesty and truthfulness weren’t just good and proper, but were the only way to live. And scam artists take advantage of this, as well as the shame and confusion caused by fraudulent activity.
If your loved one was taken advantage of, their fear that it may be seen as a lessening of their mental capabilities and capacities could be cause alone for not speaking up. Many senior citizens do not know who to report these activities to, or may not even know how to.
Avoiding these types of volatile, humiliating, and hurtful situations starts with understanding them and recognizing when your loved ones may be falling victim to such disdainful activities.
When it comes to high cost scams, the FBI reports a fraudulent reverse mortgage– or, home equity conversion mortgage (HECM)– as being perpetrated and “engineered by unscrupulous professionals in a multitude of real estate, financial services, and related companies to steal the equity from the property of unsuspecting senior citizens or to use these seniors to unwittingly aid the fraudsters in stealing equity from a flipped property.”
Reverse Mortgage Scams and How to Avoid Them
A reverse mortgage “enables eligible homeowners to access the equity in their homes by providing funds without incurring a monthly payment. Eligible borrowers must be 62 years or older who occupy their property as their primary residence and who own their property or have a small mortgage balance.”
In other words, if your loved ones own their house, they can tap in to its value and effectively turn that value in to cash without having to pay it back. Reverse mortgages increased an incredible 1,300 percent between 1999 and 2008, creating an opportunity for amplified fraudulent activities. And, unfortunately, seniors have become easy targets for those activities.
In many instances, seniors reported they were offered free homes, opportunities for investment, and assistance with foreclosures or refinancing, and can also be unwitting “straw buyers” in property flipping scams. Often, seniors are targeted through seemingly legitimate means like television, radio, billboards, and mailers, and can even be approached through activities held at local churches and investment seminars.
Encourage your loved ones not to respond to unsolicited advertisements, phone calls, or sales visits. And as with anything else, they should not sign anything they do not understand, and should never accept payment from someone for a home they did not purchase. If you want to insure that your loved ones are not falling victim to such a reverse mortgage scam—or any other kind of financial fraud—is to seek out a financial counselor.
The Bottom Line
There is no shortage of ways for those dishonest enough to take advantage of senior citizens to do so. Reverse mortgages offer a significantly more lucrative opportunity for scam artists than others. Take time to speak with your loved ones about how they are managing their assets, and do not be afraid to speak up in situations that seem dangerous.