The FHA official site includes a page about reverse
mortgages and Home Equity Conversion Mortgages. On that page, you’ll find a
warning from the FHA and HUD about scam artists who take advantage of some loan
applicants who don’t know enough about the FHA’s free information on HECM loans
and reverse mortgage loans.
“Reverse mortgages are becoming popular in America” the FHA
site says, “Reverse mortgages are a special type of home loan that lets a
homeowner convert the equity in his/her home into cash. They can give older
Americans greater financial security to supplement social security, meet
unexpected medical expenses, make home improvements, and more. If you are
interested in a reverse mortgage, beware of scam artists that charge thousands
of dollars for information that is free from HUD!”
The warning is good–but what kind of information are these
scam artists charging so much money for? According to the FHA, simple details
such as the nature of a HECM loan, who is eligible, even free advice about
whether a borrower should us an estate planner to find a participating lender.
On this topic, the FHA and HUD advise:
“FHA does NOT recommend using any service that charges a fee
for referring a borrower to an FHA-approved lender. You can locate a FHA-approved lender by
searching online at www.hud.gov or by contacting a HECM counselor for a
listing. Services rendered by HECM counselors are free or at a low cost. To locate a HECM counselor Search online or
call (800) 569-4287 toll-free, for the name and location of a HUD-approved housing
counseling agency near you”.
Very good advice for borrowers age 62 an older (the only
people who qualify for FHA HECM loans) interested in applying for an FHA Home
Equity Conversion Mortgage. Here’s another fact about HECM loans you might not
know–according to the FHA official site:
“By law, you have three calendar days to change your mind
and cancel the loan. This is called a
three day right of rescission. The
process of canceling the loan should be explained at loan closing. Be sure to ask the lender for instructions on
this process. Mortgage lenders differ in
the process of canceling a loan. You
should ask for the names of the appropriate people, phone numbers, fax numbers,
addresses, or written instructions on whatever process the company has in
place. In most cases, the right of rescission
will not be applicable to HECM for purchase transactions.”
Relate Videos:
http://www.slideboom.com/presentations/639444/FHA-Warns-About-Home-Equity-Mortgage-Loan-Scams