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It is NOT Reverse Mortgage Fraud When…

September 4, 2009

You may have seen some headlines about reverse mortgage fraud.  But I want to clarify that what is often being called reverse mortgage fraud is not really reverse mortgage fraud.

  • It is NOT reverse mortgage fraud when a senior who has a reverse mortgage and has a child or grandchild who scams their parent of money.  It is theft, financial exploitation, and abuse by the child or grandchild!  Children and grandchildren also steal, financially exploit and/or abuse seniors who don’t have a reverse mortgage.
  • It is NOT reverse mortgage fraud if a Power of Attorney misuses the funds from a senior’s reverse mortgage.  It is financial exploitation and abuse by the Power of Attorney, not of, or because of, the reverse mortgage.
  • It is NOT reverse mortgage fraud when a title company’s closer doesn’t follow the regulations (as the story in the recent Wall Street Journal reported) and they take the money the lender sent to pay off a borrower’s current liens.  It is theft and fraud by a title company’s closer and can, and has, happened with conventional loans.

As unfortunate as these situations are, they are NOT reverse mortgage fraud and the media should not call it such.

Let’s look at an analogy:  If a store selling TV’s is robbed because the thief was enticed and wanted the TV it is the person who did the stealing that committed the crime, not the TV manufacturer.  In this scenario the store represents the senior, both are victims.  The money or reverse mortgage funds are represented by the TV.  And the lender, provider of the reverse mortgage funds is represented by the TV manufacturer and provider of the merchandise.TV

So this is not fraud by the TV manufacture just because the thief stole the manufacturer’s TV.  Nor is it reverse mortgage fraud just because the reverse mortgage provided the funds for someone to steal from or abuse a senior.

Do you we see the media publishing articles that TV manufactures committed fraud when one of their TV’s was stolen?   Then why does the media and politicians accuse reverse mortgage lenders of fraud when someone else is committing the crime?  Why are the words reverse mortgage used in the same sentence as fraud in these types of circumstances?

For the facts the media should know read my previous posts:  “The Media Needs The Revesre Mortgage Facts” and “But Wait, There’s More…Reverse Mortgage Facts The Media Needs To Know

© 2009-2014 Beth Paterson 651-762-9648

This material may be re-posted provided it is re-posted in its entirety without modifications and includes the contact information, copyright information and the following link:

24 Comments leave one →
  1. September 8, 2009 5:22 am

    Thank you for another well written statement about the media’s slanted reporting – scandal seems to sell. The truth is apparently not required anymore. I did email the author of the latest Wall Street Journal sayint the same thing that you did, although I may not have been as polite. I am not holding my breath for a response, but I think everyone ought to write. Just yesterday I was having a good discussion with a reverse mortgage prospect, and he asked me why they had such a bad name. He couldn’t put his finger on any negative aspects at all, he just knew they were bad, based on media reporting.
    Thanks again,

    • September 8, 2009 6:18 am

      George, thank you for your comments. Yes, scandal does seem to sell and the reverse mortgage seems to be under target these days. I’m glad to hear you wrote to the author of the Wall Street Journal. It is important that the media from us in the industry. Even if you don’t receive a reply, keep responding!

      I totally agree, everyone should write although they need to make sure they are providing all the facts. In fact yesterday I was reading a article on the internet on reverse mortgages that was trying to relay them as a good and positive option however had some facts wrong. One comment made as a correction had a portion of the information correct. But they also made a strong statement , “There are no lenders anywhere in the galaxy that will offer ANY mortgage with the incredibly senior friendly terms of a reverse mortgage. Without the FHA Insurance the reverse mortgage would not exist.” This is not true. While FHA is still the most prominent, there have been and will be again some day, proprietary reverse mortgage products not insured by FHA that offer senior friendly terms. So unfortunately those in the industry are still spreading incorrect or misleading information. (Yes, I did add my comments with the corrected information and I hope others do also.)

      I’ve had the same experience with prospects who have heard the negatives about reverse mortgage but can’t explain why or what that is. I did a post in response to this titled “When You Don’t Know What You Don’t Know About Reverse Mortgages.”

      It’s great when we have the opportunity to provide the facts to someone who has the negative impression, but it’s difficult to overcome for those we don’t have the opportunity to talk with and they just get their information from the media, their neighbors or others who don’t have the facts. It’s like the game of “Telephone” where everyone sits in a circle and one person starts a story with the person sitting next to them and that person then turns to the next person and shares the story. By the time it gets back to the original person, it is a totally different story. At this point the only way I know how to get the facts out is writing and getting the facts out wherever and however we can.

      Hopefully you were able to dispel the “bad name” with the prospect you were talking with. And if nothing else the next time they hear someone say something bad/incorrect about reverse mortgages they will share the facts as well as your name as a resource of the facts.

      If you have written responses to the media, you might share a copy of your letter with prospects so they will have the opportunity to see the facts vs what is in the media.

  2. September 8, 2009 11:15 am

    Thank you Beth for pointing me in the direction of your blog. I often recommend reverse mortgages to my clent’s family members who are struggling while paying round the clock caregivers for their parents. This is a very valuable opportunity to have the care needed without obligating the children to pick up the expense. I have one such client now whose children did a quit claim deed transferring title to them and now constantly complain about caregiver expense for their mother who has advanced Alzheimer’s. I repeatedly ask them to return the home to the mother’s name so she could receive the care that’s necessary but they refuse to give up the condo. Aweful, but true. In another couple of month’s her assets will be entirely spent and then they will place her in a nursing home. This will be devastating to her as you know nursing home care is rarely sufficient. I’d like to post some of your articles on my blog if you don’t mind. I will give you full credit. Let me know if that is ok with you. Thanks

    • September 9, 2009 5:37 am

      I’m glad that you find my Blog helpful as well as the value of reverse mortgages for your clients. It is sad when children don’t realize the damage that can be done with transferring property to their name. I’m not an elder law attorney however the transfer of the property and when that happened may affect whether she has to private pay for the nursing home. You may want to pull in an elder law attorney to help with that situation. It will be really sad if this client of yours cannot stay in her home where she is comfortable with the care that she needs.

      Yes, as long as you link to my Blog and include my copyright and phone number (included in the copyright) you may use the info on your blog. I’d appreciate you letting me know when you do this.

      One post that you may find especially helpful is “Reverse Mortgages Help Celebrate Independence.” I’ve had comments that every adult child should read this one.

      Thank you!

  3. discodaug permalink
    September 18, 2009 4:37 am


    thanks for the great quality of your website, each time i come here, i’m amazed.

    have a nice day,

    John McCormick


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