Reverse Mortgages are the Next Wave of Fraud says Arizona Attorney General

“Reverse mortgages are the next wave of fraud, they’re counter-intuitive and difficult to understand,” said Terry Goddard, Attorney General for the state of Arizona during a speech in front of sixty seniors who attended an Anti-Crime University in Sierra Vista, Arizona.

The speech was part of a statewide effort to reach seniors, arming them with the information they need to detect and avoid scams said the SV Herald. Goddard covered a range of topics including reverse mortgages, modification schemes, property tax appeal fraud, and more.

“Because of Arizona’s large retirement community, we’re one of the top states in the country for identity theft, fraud and exploitation of seniors,” Goddard said. “And protecting Arizona seniors has become the number one priority for my office.” Currently, 17 percent of Arizonans are over 60, and that number is expected to climb to 25 percent by 2020, he said. Some of the biggest frauds his office is watching include scam artists calling themselves census takers, along with mortgage scams and reverse mortgages.

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According to the Herald, Goddard did say that he believes a reverse mortgage can be a good thing for some seniors, he advises everyone to get help from a reputable company or HUD counselor before making a decision.

Additionally, Goddard told attendees to always avoid adjustable rates when considering a reverse mortgage. “The adjustable rates scare me,” he said. It’s because they’ll continue to go down, which means less money for the senior who is locked into a contract he said. Additionally, stay away from reverse mortgages with terms, says Goddard, who argues that a reverse mortgage should be in effect through the person’s lifetime, with no limiting terms.

“There are HUD-certified, nonprofit counselors out there. They are where people should turn to for help,” he said.

Attorney general shows seniors what to watch for in scams

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  • “Something needs to be done about these remarks in particular.”rnrnI am hopeful that NRMLA will be able to start dealing with these misinformed comments soon!rnrnThere is a NRMLA webinar at noon eastern, that will discuss the proposed PR campaign and I sincerely hope they are going to announce that they are kicking it off April 1!!

  • “They’re counter-intuitive and difficult to understand.” I won’t even waste my time typing why this man is wrong and ill informed. What a sad commentary on and perfect example of how publicly elected officials have lost touch with the peopleu2026

  • If you originate in the state of AZ, I’d look to contact Attorney General Goddard and his senior policy advisor Pam Stevenson about their “Senior Sleuths” program. They are going to continue doing damage in the state by spreading misinformation. How they don’t take the time to educate themselves and not speak in generalities is beyond me. Take a look at the some of his comments from the article,nnWhen considering a reverse mortgage, always avoid adjustable rates, Goddard advises. u201cThe adjustable rates scare me,u201d he said. Itu2019s because theyu2019ll continue to go down, which means less money for the senior who is locked into a contract. Additionally, stay away from reverse mortgages with terms, says Goddard, who argues that a reverse mortgage should be in effect through the personu2019s lifetime, with no limiting terms.”nnCan he honestly tell prospective clients with the sole need to supplement their monthly income that an adjustable rate HECM isn’t the proper choice? All it takes is one look at an amortization schedule to understand that isn’t true. nnWhat about a terminally ill client with a POA adult child that has requested a term payment of $4K per month to cover in home medical care? Is that a bad choice because it isn’t the “lifetime” option?nnLast but not least, can we start hearing some examples of reverse mortgage fraud from these politicians that like to use that talking point? I only know of the recent scenario in Atlanta regarding HECM fraud. I’d honestly like to hear what else is happening that isn’t being caught by the safeguards that are in place.

  • If the AG had divided his reverse mortgage warnings between HECMs and proprietary RMs, his speech might have made some sense. rnrnHere is my basic objection to all these warnings. Warn the seniors where the fraud exists. These well meaning warnings about fraud make the HECM origination process look like fraud. If they want to warn about not allowing the originator to participate in the decision about how to use the funds, what is wrong with that? If they want to have a reporting mechanism for those originators who actually enrich themselves by use of the proceeds, so be it. But to call all parts of HECM origination into question is irresponsible and should be strongly attacked by our two trade associations, NRMLA and the MBA. rnrnTo be imprecise about where fraud exists is detrimental not only to the industry but also to seniors. Something needs to be done about these remarks in particular.

  • If the AG had divided his reverse mortgages warnings between HECMs and proprietary RMs, his speech might have made some sense.

    Here is my basic objection to all these warnings. Warn the seniors where the fraud exists. These well meaning warnings about fraud make the HECM origination process look like fraud. If they want to warn about not allowing the originator to participate in the decision about how to use the funds, what is wrong with that? If they want to have a reporting mechanism for those originators who actually enrich themselves by use of the proceeds, so be it. But to call all parts of HECM origination into question is irresponsible and should be strongly attacked by our two trade associations, NRMLA and the MBA.

    To be imprecise about where fraud exists is detrimental not only to the industry but also to seniors. Something needs to be done about these remarks in particular.

    • “Something needs to be done about these remarks in particular.”

      I am hopeful that NRMLA will be able to start dealing with these misinformed comments soon!

      There is a NRMLA webinar at noon eastern, that will discuss the proposed PR campaign and I sincerely hope they are going to announce that they are kicking it off April 1!!

  • If you originate in the state of AZ, I'd look to contact Attorney General Goddard and his senior policy advisor Pam Stevenson about their “Senior Sleuths” program. They are going to continue doing damage in the state by spreading misinformation. How they don't take the time to educate themselves and not speak in generalities is beyond me. Take a look at the some of his comments from the article,

    When considering a reverse mortgage, always avoid adjustable rates, Goddard advises. “The adjustable rates scare me,” he said. It’s because they’ll continue to go down, which means less money for the senior who is locked into a contract. Additionally, stay away from reverse mortgages with terms, says Goddard, who argues that a reverse mortgage should be in effect through the person’s lifetime, with no limiting terms.”

    Can he honestly tell prospective clients with the sole need to supplement their monthly income that an adjustable rate HECM isn't the proper choice? All it takes is one look at an amortization schedule to understand that isn't true.

    What about a terminally ill client with a POA adult child that has requested a term payment of $4K per month to cover in home medical care? Is that a bad choice because it isn't the “lifetime” option?

    Last but not least, can we start hearing some examples of reverse mortgage fraud from these politicians that like to use that talking point? I only know of the recent scenario in Atlanta regarding HECM fraud. I'd honestly like to hear what else is happening that isn't being caught by the safeguards that are in place.

  • “They're counter-intuitive and difficult to understand.” I won't even waste my time typing why this man is wrong and ill informed. What a sad commentary on and perfect example of how publicly elected officials have lost touch with the people…

  • “They’re counter-intuitive and difficult to understand.” I won’t even waste my time typing why this man is wrong and ill informed. What a sad commentary on and perfect example of how publicly elected officials have lost touch with the peopleu2026

  • “Something needs to be done about these remarks in particular.”

    I am hopeful that NRMLA will be able to start dealing with these misinformed comments soon!

    There is a NRMLA webinar at noon eastern, that will discuss the proposed PR campaign and I sincerely hope they are going to announce that they are kicking it off April 1!!

  • “Something needs to be done about these remarks in particular.”rnrnI am hopeful that NRMLA will be able to start dealing with these misinformed comments soon!rnrnThere is a NRMLA webinar at noon eastern, that will discuss the proposed PR campaign and I sincerely hope they are going to announce that they are kicking it off April 1!!

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