Montana Woman Uses Reverse Mortgage to Bilk Mother Out of $120K

A Montana woman was convicted last Friday of bilking her elderly mother out of more than $120,000 from proceeds of a reverse mortgage, reports the Missoulian.

Paulette Homer was found guilty by District Judge Karen Townsend of using the funds from a reverse mortgage taken out on her mother’s home to pay off her own credit card debts, buy jewelry, stable her horses, pay medical bills, take out thousands of dollars of cash withdrawals, and other illegal uses, according to the article.

Homer’s mother suffers from Alzheimer’s disease, and prosecutors argue she did not have the “capacity to appreciate or understand” what she was doing when the reverse mortgage was taken out in the spring of 2008, as arranged by Homer, according to witnesses at the trial.

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The case pitted Homer against her three siblings, all of whom believed their sister had abused their mother’s trust and taken advantage of her condition to fund the relief of Homer’s debt and her purchases, which also included furniture and other items for a new condominium. In opening and closing arguments, prosecutors Jennifer Clark and Cory Laird told the judge that elder abuse is rampant in the U.S., and that Homer’s actions are yet another example of it.

“Every time we look the other way and we allow this to occur, we give these criminals a pass,” said Laird in his closing argument on Friday.

Homer’s court-appointed attorney, Lisa Kauffman, did not offer a closing statement and did not put her client on the stand. Kauffman argued that Homer’s three siblings were merely incensed that they did not get any of their mother’s money, and told the judge in opening arguments that “the state should be ashamed” for bringing charges against her client. She argued that Homer’s mother was aware of what she was doing and that it constituted a “gift” to her daughter.”

Read the full story here.

Written by Alyssa Gerace

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  • While many cry out that the HECM is or is not the problem, cases like this should make us resolve to take note of the apparent mental capacity of the borrower.  This is very difficult to detect especially with so called sun downers.  Lenders should be diligent to provide training on this important issue periodically.

    But our industry cannot prevent such problems from developing.  Many times children fail to help oversee the actions of siblings.  As family members we all need to be involved in the welfare of our parents.

  • Without meeting clients face to face you have no way of truly knowing the “state of mind” of your client. With more and more national lenders sending out applications via mail it is in the hands of counselors to help determine the clients capacity to understand the Reverse Mortgage. I’m not even sure why the article needed to include “Reverse Mortgage”; it could have just as easily said the daughter got her mother to refinanced and took all the cash out or maxed out the mother’s credit cards without her knowing. This is why Reverse Mortgage continues to have the noose of a bad reputation around its neck. It’s NOT the “Mortgage’s” fault!

  • Without meeting clients face to face you have no way of truly knowing the “state of mind” of your client. With more and more national lenders sending out applications via mail it is in the hands of counselors to help determine the clients capacity to understand the Reverse Mortgage. I’m not even sure why the article needed to include “Reverse Mortgage”; it could have just as easily said the daughter got her mother to refinanced and took all the cash out or maxed out the mother’s credit cards without her knowing. This is why Reverse Mortgage continues to have the noose of a bad reputation around its neck. It’s NOT the “Mortgage’s” fault!

    • jerry,
       
      Fundamentally, I have to disagree as long as the facts are correct.  Our concern should be about the needs of the senior first and the reputation of the product a distant second. 
       
      As we all know, the only time taking money out of a reverse mortgage can occur is when there is an available line of credit.  By design it cannot happen with a fixed rate HECM since all proceeds must be taken at funding.  If our product can be improved to help prevent such situations, we need to be aware of the situations where this is happening.  Many times “necessity is the mother of invention.” 
       
      Meantime we need to warn seniors about embezzlement no matter what the asset is.  We need to encourage them to meet with elder law attorneys and others to design a system to mitigate such loss.  Seniors need to view a reverse mortgage credit line like any other easily accessible source of cash.  Do they have sufficient safeguards in place on all of their assets to minimize their exposure to theft in case they lack the capacity to control the situation?
       
      Check with organizations like AARP and the CSA to see what “canned” presentations they have on this subject and do presentations on such subjects perhaps with others who serve the senior population.  Sometimes the reporter might be willing to run such a story.

    • jerry,
       
      Fundamentally, I have to disagree as long as the facts are correct.  Our concern should be about the needs of the senior first and the reputation of the product a distant second. 
       
      As we all know, the only time taking money out of a reverse mortgage can occur is when there is an available line of credit.  By design it cannot happen with a fixed rate HECM since all proceeds must be taken at funding.  If our product can be improved to help prevent such situations, we need to be aware of the situations where this is happening.  Many times “necessity is the mother of invention.” 
       
      Meantime we need to warn seniors about embezzlement no matter what the asset is.  We need to encourage them to meet with elder law attorneys and others to design a system to mitigate such loss.  Seniors need to view a reverse mortgage credit line like any other easily accessible source of cash.  Do they have sufficient safeguards in place on all of their assets to minimize their exposure to theft in case they lack the capacity to control the situation?
       
      Check with organizations like AARP and the CSA to see what “canned” presentations they have on this subject and do presentations on such subjects perhaps with others who serve the senior population.  Sometimes the reporter might be willing to run such a story.

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