Although the FHA reverse mortgage is heavily regulated and closely monitored by the government, there are still some people who will take advantage of homeowners who are eligible for this product. Although it is not likely you will encounter these people, there are precautions that you can take in order to protect yourself as a consumer.

Some examples of red flags are:

  Paying for free information - There is no reason to pay for information about the FHA reverse mortgage. This information can be obtained for free from our Reverse Mortgage Specialists, as well as on the federal Department of Housing and Urban Development's (HUD) official website. If you do decide to retain the services of a financial advisor, make sure that they are certified and knowledgeable about reverse mortgages. The transaction with your financial advisor should be completely separate from your reverse mortgage contract and cannot be financed into the loan.

  Downplaying the relevance of pre-loan counseling - As part of the application process, you will be required to participate in a counseling session with a HUD-approved financial counselor. This is in order to ensure that you have all the facts and completely understand the terms of the product. If anyone tries to trivialize this process or discourage you from asking questions, they are acting against your best interests.

  Incomplete or inaccurate documents - Do not put your signature on a document that is inaccurate or incomplete. Remember: all that matters is what is on paper. Your loan originator may tell you that the information can be corrected later and this may be accurate. However, no respectable loan officer will be offended if you refuse to sign something that is inaccurate. You should also make sure that you understand anything you sign. If your loan originator cannot explain the document to you, it is prudent to find someone who can before signing your name to it.

  Forgery - Any person to whom you provide your personal information has an opportunity to defraud and take advantage of you.

  Misrepresentation - No legitimate government representative will solicit you to obtain a reverse mortgage. Any solicitor who claims to be affiliated with the government or a non-profit organization should not be trusted. If someone makes these claims to you, they have violated federal regulations and can be reported to HUD.

  Product Bundling - An example of this would be if your loan originator tried to sell you any other products along with your reverse mortgage. Some helpful tactics to avoid purchasing unnecessary products or services are:

• Do not finance any non-closing related products or services at closing. Beginning October 2008, it is illegal for a lender to finance any additional financial products directly through your reverse mortgage.
• Investigate the product you are being asked to purchase and consider what actual benefit it offers you.
• Do not hesitate to shop around if you think that you are being taken advantage of by someone who is pressuring you to buy additional products.
• If you plan to use your proceeds for a specific expense, such as home improvements or in-home healthcare, it is advisable to finalize your reverse mortgage transaction before entering into any other contracts. Although you may use your reverse mortgage proceeds however you wish, keeping your transactions separate helps protect you from being at risk.
• A reverse mortgage, like the rest of your finances, is between you, your financial advisor(s) and, in some cases, your family. Sharing this type of information with third parties, such as contractors or healthcare providers, even if the reverse mortgage is what is being used to pay them for their services, is not necessary and is strongly discouraged.

In general, anyone who pressures you into buying a product with your reverse mortgage or makes you feel otherwise uncomfortable most likely is not the best choice for assistance with your financial needs. Whether or not to pursue a reverse mortgage is an important decision, so it is important that you be able to trust and respect your loan specialist.