When we talk about reverse mortgage fraud, we are almost always talking about cases in which seniors have gotten swindled by a reverse mortgage company. A predatory lender approaches them and convinces them to sign a bad deal on a home which results in them losing either the home or a whole lot of money.
However, there are also reverse mortgage fraud problems which occur the other way around. In these cases, borrowers are fraudulent in their dealings with lenders and end up getting reverse mortgage money that they don't actually have the right to obtain.
The most common type of reverse mortgage fraud against lenders is when borrowers say that a home is their primary residence even though it's not. The reverse mortgage is only allowed to be used for a primary residence that is lived in by the couple. Some people try to take out reverse mortgages on second homes and investment properties. If they live and say that they live there most of the time, they're committing fraud.
Other types of reverse mortgage fraud against lenders include misrepresentation of age in order to be able to qualify for the loan, forgery of the land deed to the property, and forging payoffs of existing mortgages. Other fraud against lenders may impact the borrower as well such as when adult children forge power of attorney to get a reverse mortgage loan on the parents' home. All of these instances weaken the reverse mortgage market and make it harder for legitimate borrowers to get good loans.
Question of the Day: Is it more common for reverse mortgage fraud to be from a lender against a borrower or the other way around?
