WSJ: Reverse Mortgage Frauds Latest Twist

wall_street_journal_logo A new article from the Wall Street Journal details how a retired auto mechanic used the money he received from a reverse mortgage to pay off his existing $70,000 mortgage and "piddled away" the remaining $24,000 on things like restaurant meals for his four girlfriends, he says.

Unfortunately, the owner of the Orlando, Fla., title company that handled his loan admitted to stealing more than $1 million from several reverse-mortgage holders, including the retired auto mechanic.

[REVERSEchart]Bank of America Home Loans says the title agent never sent it the money required to pay off Mr. Ford’s previous mortgage. As a result, Mr. Ford says, the bank recently threatened to foreclose on his seven-acre ranch in Archer, Fla.

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"That will put me on the streets with my cars and horses and tools," says the 68-year-old Mr. Ford. Bank of America, which says there is no immediate danger of foreclosure, adds that it is working with Mr. Ford "to find a home-retention solution."

While the article does say that such fraud is rare "is occurring in every region of the United States and reverse-mortgage schemes have the potential to increase substantially," according to a report issued by the Federal Bureau of Investigation and the Office of Inspector General.

Mortgage Fraud: A Classic Crime’s Latest Twists

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  • Bank of America, which says there is no immediate danger of foreclosure, adds that it is working with Mr. Ford “to find a home-retention solution.”

    Excuese me? A “Home-retention solution”? B of A should have been paid in full by the title co. What about the title insurance that the customer paid for? Maybe the title co. did not pay for or put the title policy into place? This could have eaisly happened on a forward loan, just more fodder for the fire on reverse.

    • Shouldn't the title to this article be:
      TITLE COMPANY FRAUDS LATEST TWIST!!!!!
      Here we go again… Reverse Mortgage and
      FRAUD on the same line.

  • Agreed! The title of this article should read Dishonest Title Agent DEFRAUDS HOMEOWNER! What the hell does the reverse mortgage have to do with the situation? The client is wining & dining his 4 girlfriends & riding his horses! Sounds like he was pretty happy to me!
    Now, why don't about 10,000 of us contact the Wall Street Journal and tell them that! When do we, as an industry, start sticking up for ourselves and stop taking it on the chin?

    • Agreed, we need to respond quickly and by everyone. If someone can get the e-mail address for the author and post it, everyone should respond. Enough is enough! Why do all these articles keep getting posted and there is no rebuttal that gets posted in the papers that write them.

  • The media in general is always wrong. They do not verify anything, never get the story straight and are just trying to stir up controversy to get noticed. Anyone who listens to the media as an informative accurate source, deserves what they get. The media is there for one thing, entertainment.

  • I didn't read anything in the article that was unique to RM's. Title Agent defalcation has been a dirty little secret in that industry for years. Didn't the RM lender have an Insured Closing Letter? If so, they should go after the underwriter and pay off BofA.

    • “Such measures are designed to curtail “flipping.” Under these arrangements, speculators purchase distressed properties and, with the aid of cosmetic repairs and inflated appraisals, deed them to seniors at above-market prices. Seniors—some of whom may be part of the scheme—typically are promised homes for no money down. In return, they secure a reverse mortgage and divert some, if not all, of the proceeds to the scheme's promoters. Regulators say promoters have even recruited seniors from homeless shelters.”

      This is unique, and I hope it is not possible these days.

  • Totally irresponsible reporting. The RM had nothing to do with the fraud – it was title company fraud. Could have been any real estate transaction. But again, the damage is done.

  • If you read the article, it doesn't say that there are problems with fraud by lenders or with reverse mortgage products per se. What it does point out is that as awareness and use of reverse mortgages grow, so does the use of reverse mortgages by fraudsters of various sorts. We must all remain vigilant and try our best to make sure we keep fraudsters away from our business and that we help our elderly clients look out for those who want to take their money.

  • I noticed that the writer of the article is fine with naming Bank of America, but why is there no mention of the name of the title company that did horrible thing to a senior?????? Always blame the bank!!

  • Unless the title/escrow company is connected financially with the RM broker who did the loan, this story is about theft of proceeds pure and simple and has nothing to do with whether the homeowner acquired a forward or reverse mortgage or squandered proceeds on dinners with his girlfriend. It's a sad thing that BofA is left in the unpalatable position of dealing with the aftermath.

  • Hard to believe that this was “spun” into a reverse mortgage fraud article and printed in the WSJ. This is title/escrow fraud, pure and simple. Could have (and does) happen in the forward world, but to highlight a senior how may loose his home due to a reverse mortgage transaction, it just makes us all look bad.

    • So, let me get this straight. A senior homeowner takes out a reverse mortgage. The title/escrow company doesn't pay the loan off through escrow as they are required to by law. The title of the report on the theft/fraud in the formerly estimable WSJ includes the words Reverse Mortgage, thereby creating guilt by association in the defrauding of the senior homeowner. I don't believe we are paranoid. There is definitely slanted reporting going on here. Why are we the industry whipping boys/girls? It does not seem possible that the flurry of negative reports being currently presented in the media using the name “reverse mortgage” in the titles are coincidental. After all, just because you are paranoid doesn't mean someone isn't out to get you.

      The question is who would benefit from having the spotlight taken off of the practices of the mortgage industry that got us into the market debacle and current banking crisis and instead, through incorrect reporting, faulty reasoning, and innuendo placing that spotlight on the relatively small market and obscure product of HECM reverse mortgages? Does that mean that TARP money is behind this? Oh the conspiracy theorists could have a field day.

      The problem is, we, as a small industry of entrepreneurs, are being unfairly tarred with the incorrect and problematic reporting, and the senior homeowners who may need the mortgage product we offer are being unnecessarily frightened from using the very product Congress created to help them. And unless Congressional leaders step up to the plate, a product that helps to supplement the insufficient amounts many seniors receive in Social Security payments and may save them from endless nightmares in the current financial crisis, will dwindle and be stamped out by the swirl of negative publicity some of our legislative leaders and governmental officials have helped to promote.

  • Hard to believe that this was “spun” into a reverse mortgage fraud article and printed in the WSJ. This is title/escrow fraud, pure and simple. Could have (and does) happen in the forward world, but to highlight a senior how may loose his home due to a reverse mortgage transaction, it just makes us all look bad.

  • So, let me get this straight. A senior homeowner takes out a reverse mortgage. The title/escrow company doesn’t pay the loan off through escrow as they are required to by law. The title of the report on the theft/fraud in the formerly estimable WSJ includes the words Reverse Mortgage, thereby creating guilt by association in the defrauding of the senior homeowner. I don’t believe we are paranoid. There is definitely slanted reporting going on here. Why are we the industry whipping boys/girls? It does not seem possible that the flurry of negative reports being currently presented in the media using the name “reverse mortgage” in the titles are coincidental. After all, just because you are paranoid doesn’t mean someone isn’t out to get you. rnrnThe question is who would benefit from having the spotlight taken off of the practices of the mortgage industry that got us into the market debacle and current banking crisis and instead, through incorrect reporting, faulty reasoning, and innuendo placing that spotlight on the relatively small market and obscure product of HECM reverse mortgages? Does that mean that TARP money is behind this? Oh the conspiracy theorists could have a field day. rnrnThe problem is, we, as a small industry of entrepreneurs, are being unfairly tarred with the incorrect and problematic reporting, and the senior homeowners who may need the mortgage product we offer are being unnecessarily frightened from using the very product Congress created to help them. And unless Congressional leaders step up to the plate, a product that helps to supplement the insufficient amounts many seniors receive in Social Security payments and may save them from endless nightmares in the current financial crisis, will dwindle and be stamped out by the swirl of negative publicity some of our legislative leaders and government officials have helped to promote.

  • this is crazy stuff. the title company not paying BOA? evidently BOA was not the reverse lender. this does not sound real. yes title insurance. closing protection letter. what reverse lender would allow such wrong-doing? I would like to know. very odd. and yes it is the title company, but again what reverse lender would let this go unheeded? does not make any sense. WSJ is surely down in the mud with this.

  • this is crazy stuff. the title company not paying BOA? evidently BOA was not the reverse lender. this does not sound real. yes title insurance. closing protection letter. what reverse lender would allow such wrong-doing? I would like to know. very odd. and yes it is the title company, but again what reverse lender would let this go unheeded? does not make any sense. WSJ is surely down in the mud with this.

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