Avoid Reverse Mortgage Scams

Investment Fraud Strategies

Investment fraud schemes work in much the same way equity theft scams do. In this case, how do the scammers steal victims’ reverse mortgage funds?

1. The scammer offers to invest the homeowner’s loan funds in an annuity, real estate, or other investment product.
2. The scammer recommends older adults use the cash they receive from their loan to play the Stock Market.
3. The scammer encourages victims to “invest” their loan proceeds in the lottery or another sweepstakes-style scheme.

“A” is correct. The scam artists then keep the loan proceeds themselves or invest them in a product from which they profit. These scammers are often affiliated with a HECM loan originator who cross-sells the investment product to victims.