SCAM ALERT: Elderly Scam Fraud Alert! Mortgage Fraud Scam Attack Seniors
Polly Fehler has been living a financial nightmare since April 2021. It began when the Oconee County, South Carolina resident was using public Wi-Fi. A pop-up message on her computer screen said her computer had been compromised and to call the phone number listed on her screen for help. When she called, the person, purporting to be with Microsoft, said he could fix the problem for a few hundred dollars.
A few months later, the person, who was actually a scammer who had hacked into her computer, said he could not fix the problem and was giving her a refund. But, the scammer claimed to have overpaid her by accidentally putting in “too many zeros” and insisted she pay back the overage by wiring the money immediately.
To her shock, Fehler said that she saw $26,000 in her checking account when she knew she only had $6,000 in it. The scammer said that he was returning the refund the same way she sent it. Of all things, she went to her bank to wire the money, but even the bank did not notice the red flag of Fehler wiring $20,000 to Vietnam.
What really prompted an investigation was an even more shocking reveal: The $20,000 came from Fehler’s own home equity line of credit that the hacker tapped into, and transferred into her checking account.
“It’s devastating to have something happen like this, and that’s a lot of money,” Fehler said in an interview about the scam.
After hearing story after story about scammers targeting seniors, like Fehler, South Carolina lawmakers passed legislation to protect seniors from falling prey to financial fraud. The Protection of Vulnerable Adults from the Financial Exploitation Act allows banks to halt and investigate suspicious transactions to determine if seniors are the target of scammers.
While older adults are targeted for a variety of frauds, mortgage fraud has been topping the list in recent years. Scammers can leave older adults on the hook for paying back mortgage loans or having their homes—or the equity in their homes—stolen right out from under them.
Types of Mortgage Fraud
The FBI has identified two specific areas of mortgage fraud:
• Fraud for profit. This type of fraud aims to misuse the mortgage lending process to steal cash and equity from lenders or homeowners. The fraud involves “industry insiders,” such as bank officers, appraisers, mortgage brokers, attorneys, loan originators, and other professionals who have specialized knowledge or authority to commit or facilitate the fraud. The FBI prioritizes these types of cases.
• Fraud for housing. This type of fraud is typically done by a borrower—who may or may not be a scammer.—who wants to purchase a house. The borrower may, for example, falsify a loan application or entice an appraiser to manipulate a property’s appraised value.
The FBI says it works with state and local regulatory and law enforcement agencies nationwide on mortgage fraud cases.
Anti-Fraud Campaign Created For Seniors
Federal, state, and local authorities and advocates for seniors are joining forces to alert older adults about mortgage fraud. For example, in Westchester County, New York, the Departments of Consumer Protection and Senior Programs and Services (DSPS) began an anti-fraud information campaign for consumers.
“We want to be sure that our seniors are informed about any and all possible threats to their good quality of life and the possessions they have worked so hard for,” DSPS Commissioner Mae Carpenter said in a statement about the mortgage fraud threats.
County officials say they are seeing one of two illegal schemes against seniors:
• The fraudster mortgages the victim’s property in the victim’s name sells the property to unsuspecting buyers, and keep the proceeds, or
• Transfers the property to an entity, like a limited liability company, that the fraudster controls and then mortgages the property.
Homeowners typically discover the fraud when they receive a notice to vacate from the County sheriff, a notice of foreclosure, or a notice from the tax office when they try to pay property taxes.
Westchester County Executive George Latimer said he hopes the information the departments provide will help seniors stay on high alert for mortgage fraud.
Seniors Get Taken in Reverse Mortgage Scams
A reverse mortgage, also known as Home Equity Conversion Mortgages, is a legitimate loan product that allows homeowners who are 62 years old or older to access the equity in their home and turn it into cash. Seniors use the extra money to supplement their Social Security income or pay for medical expenses or in-home care, make home improvements, or pay off their remaining mortgage loans.
Obtaining a reverse mortgage sounds easy but the process is rather complex, which is why older adults are advised not to sign any papers without understanding the process.
There are a variety of reverse mortgage scams and a common one is convincing homeowners to use their reverse mortgage loan for a “can’t miss investment, such as an insurance product or annuity that allegedly has a high return. Seniors, however, never receive this return.
Some scammers acting as realtors use seniors as “straw buyers” to buy another home (usually one in need of repair), fix it up, and resell it by using cash from their reverse mortgage. The realtor and other fraudsters involved could get commissions and profits for themselves, but seniors do not make a profit and end up having to pay a hefty mortgage.
Another popular scam involves a handyman or a contractor convincing a homeowner to use a reverse mortgage to pay for major home repairs. Scammers might also offer mortgage payment relief to homeowners looking to avoid foreclosure. The scammers claim that, for nonrefundable payment upfront, they can make changes to the homeowner’s loan so they can stay in their home. However, they take the money and disappear without providing the service.
To avoid reverse mortgage scams, the FBI advises:
• Do not respond to unsolicited advertisements.
• Be suspicious of anyone claiming that you can own a home with no down payment.
• Do not sign anything that you do not fully understand.
• Do not accept payment from individuals for a home you did not purchase.
• Seek out your own reverse mortgage counselor.
How To Report Mortgage Fraud
If you believe you or someone you know may have been a victim of elder fraud:
• Contact your local FBI field Office
• Submit a tip to the FBI online at https://tips.fbi.gov
• File a complaint with the FBI’s Internet Crime Complaint Center at https://www.ic3.gov
• File a complaint with HUD’s inspector general, online or by calling 1-800-347-3735
• Contact your state attorney general’s office