Myth #7: Reverse mortgage counseling is a waste of time.
Truth: Deciding whether to take out a reverse mortgage loan is challenging. It’s hard to estimate how long you’ll stay in your home and what you’ll need to live there over the long term. Federal law requires that all individuals who are considering a HECM reverse mortgage receive unbiased counseling by an HUD-approved counseling agency. A trained counselor can help you understand the costs and features of different types of reverse mortgage, and evaluate the pros and cons of these loans for your situation. They will also discuss other options including public and private benefits that can help you stay independent longer. It’s valuable to meet with a counselor before talking to a lender, so you don’t get talked into a loan you don’t want or need. Telephone-based counseling is available nationwide, and face-to-face counseling is available in many communities. You can get counseling through NCOA’s HUD-approved Reverse Mortgage Counseling Network by calling 800-510-0301. You can also find a counselor in your area at the HUD HECM Counselor Roster.
Myth #8: Most reverse mortgage borrowers who end up facing foreclosure were scammed.
Truth: It is possible for a reverse mortgage borrower to face foreclosure if they do not pay their property taxes or insurance, or maintain their home in good repair. This is especially a risk for older homeowners who take the entire loan as a lump sum and spend it quickly — perhaps as a last-ditch effort to salvage a bad situation. Those who struggle to pay the bills each month can become overwhelmed by health or other large expenses, making it difficult to keep up with borrower obligations.
Older homeowners may be targets for scam artists who offer too-good-to-be-true real estate or investment deals. Sadly, there are also cases where seniors are talked into a reverse mortgage by family members who want to get their hands on the cash. That’s why reverse mortgage counseling is so critical. The counselor will help you look at the long-term responsibilities of a loan, not just the short-term benefits. Always avoid any unsolicited offers for a reverse mortgage or for help with these loans. If you suspect you or your family have been targeted by a scammer, call 800-347-3735 to file a complaint with HUD.
For more information about reverse mortgages and home equity options for older adults, please visit NCOA at ncoa.org/HomeEquity.
Photo courtesy of the National Council on Aging.
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