SCAM ALERT! Lenders Are Pulling A Scam With Brooklyn Reverse Mortgages. What You Need To Know!
Reverse mortgages are great because they give seniors who are house rich and cash poor needed cash. Local taxes and any HOA fees are still the responsibility of the homeowner.
Servicers can and will foreclosure if the taxes are not paid.
Reverse mortgages are great for most seniors. Unfortunately, reverse mortgage servicing companies have figured out how to cash in by screwing equity rich seniors with Brooklyn Reverse Mortgages. Champion Mortgage and Reverse Mortgage Solutions appear to be the biggest culprits in this scam.
How The Reverse Mortgage Servicing Scam Works
Most homeowners with reverse mortgages who don’t escrow their property taxes don’t pay their taxes or insurance on the day they receive their statement. They don’t need to. Most states give you 90 days to pay your tax bill. The same applies to reverse mortgages as well. Most states also allow homeowners to fall a year behind before initiating any type of tax foreclosure process.
Conventional mortgage servicers usually wait until the last minute to pay the property taxes on behalf of their customers who escrow their payments. Bank of America used to be infamous for paying a homeowner’s taxes 12 months late.
Reverse mortgage servicers have figured out how to take advantage of seniors and steal their homes by using the tax payments.
Mortgage servicers are paying the tax bills on the day or within a week of when the tax bill is issued. The senior mails a payment to the taxing authority a month or two later before the due date. Only to have the payment rejected. The taxing authority returns the payment because the payment was already paid.
As a result, the mortgage servicer then uses this “non-payment” as an excuse to initiate a foreclosure action against the homeowner. The homeowner doesn’t have any real defenses and then loses the property. The Reverse Mortgage servicing company pockets hundreds of thousands of dollars from the sale of the property. The lender also cashes in on the mortgage insurance from HUD.
In some cases, the homeowner would also enter into payment arrangements with their local government. The servicer would pay the balance without consulting the homeowner or the local taxing authority.