Scam and abuse patterns around reverse mortgages include contractor-tied financing, deed theft dressed as “help,” impersonator counselors, and fee piles that ignore 24 CFR 206.31 on a HECM. Jay Zayer, a Certified Reverse Mortgage Professional (CRMP) licensed in California and Arizona, will tell you to hang up, verify licenses, and complete independent HUD counseling. Nobody can guarantee approval, proceeds, or a court result.
A HECM is FHA-insured. It is not a government grant. Anyone who says HUD will “send you a check” as a benefit is already lying.
What are the patterns that show up before any application is signed?
Contractor financing: a roofer or solar seller wants to originate, or to steer, the reverse mortgage as a condition of the work. You lose the chance to compare. Counseling still has to be independent (24 CFR 206.41). The originator cannot sit in. See what counseling is like.
Deed theft: a helper offers to “save the house” and wants you to sign a grant deed, a blank power of attorney, or a quitclaim. A HECM is a mortgage you remain on title for. If someone wants the deed, it is not a HECM.
Fake counselor: a person who is not HUD-approved issues a “certificate,” or an originator says you must use one agency. 24 CFR 206.41(a) requires a list. California Civil Code section 1923.2(j) requires at least ten HUD-approved agencies. See finding a counselor.
Wire fraud: a last-minute email changes wiring instructions for a payoff or a draw. Call the servicer on the number from your statement, not from the email. See contacting the servicer. HUD’s lookup at 800-827-3702 is a backup for the servicer name, not a wiring desk.
- Check NMLS and state licenses for the originator.
- Check CRMP if they claim it — including on other originators, not only on Jay.
- Demand a Loan Estimate and a HUD-style HECM comparison, not a napkin.
- Refuse investment pitches tied to the loan. See portfolio coordination.
- Walk away from guaranteed proceeds.
What fee and product tricks are legal-looking but still predatory?
On a HECM, origination cannot exceed 24 CFR 206.31. Initial MIP is 2.00% of claim amount (Mortgagee Letter 2017-12) and is not optional. On a proprietary loan, origination may not have that federal cap. A $40,000 origination on a private note can be contractual and still be a reason to leave. Compare HomeSafe, Longbridge Platinum, Finance of America, and Mutual of Omaha Secure Equity — or do not close.
“No-cost” credits that raise margin are a cost shift. See no-cost reverse mortgages. Unapproved condo projects sold as “FHA will fix it later” waste counseling.
If you think you were scammed, contact your state banking or real-estate regulator, local law enforcement for deed theft, and CFPB’s complaint system. This page is not a police report.
Who should you not do business with, even if they are polite?
Anyone who says counseling is optional on a HECM. Anyone who wants title in their name. Anyone who will not put fees on a Loan Estimate. Jay will compete on clarity. He will not match a lie.
What can go wrong after closing: a “helper” requests a large draw to an account you do not control. Set a trusted contact with the servicer. Use a power of attorney you chose with an attorney, not one the helper brought.
Pressure to skip the Loan Estimate, to sign at the kitchen table the same day, or to name the contractor on the HUD-1 as a condition of the roof, is enough reason to stop. Equal Housing and NMLS IDs on a website do not prove the person at the door is that licensee. Match the photo and the NMLS number.
Who this does not help: a family that wants Jay to “go after” a closed scam as litigation counsel. He can point to regulators. He is not the prosecutor. Call the state regulator and, for deed theft, local law enforcement.
A follow-up: if the origination already closed, does TILA rescission still help? On a refinance of your principal dwelling, 12 CFR 1026.23 gives three business days. After that, complaints and, if facts support it, legal counsel. Purchases do not get that same rescission. See right of rescission. Speed matters. Waiting a year is how evidence cools.
A proprietary origination fee with no federal cap can be enormous and still appear on a contract you signed. Compare it to 24 CFR 206.31’s HECM cap before you call the private number a bargain. Walk. Another originator can price the same house.
If someone offers to ‘buy your HECM’ or to ‘take over the HUD insurance’ for a fee, hang up. You cannot sell FHA mortgage insurance as a coupon. You can pay the loan off or sell the house. Those are the honest exits.