Documented Reverse Mortgage Scams and Enforcement Cases
Government enforcement matters
Regulators have penalized lenders and brokers for misleading ads, failure to disclose risks, and cross-selling unsuitable products with loan proceeds.
Common fraud patterns (FTC/CFPB)
- Contractor scams: Contractor offers “free” roof or repairs funded by a reverse mortgage you did not plan
- Investment pitches: Using tax-free loan proceeds to buy risky investments
- Deed theft: Not a real reverse mortgage; forged documents transferring title
- Fake government letters: Mail implying FHA requires you to act immediately
How to verify
- Confirm lender is FHA-approved (HUD lender list)
- Verify counselor is HUD-approved (Housing Counseling System)
- Never sign under same-day pressure
When this is NOT a good fit
- You cannot reliably pay property taxes, homeowners insurance, and maintenance
- You plan to move within a few years
- You need every dollar of home equity preserved for heirs
- Medicaid or SSI eligibility depends on keeping assets below program limits (consult an elder law attorney)
- You were pressured by a salesperson without time to research alternatives