Make Sure a Reverse Mortgage Is Right for You

In other cases, consumers have complained that reverse mortgage salespeople persuaded them to borrow money against their homes and put it toward other investments that didn't serve in the end.

Some scammers are so ambiguous about their origins, and work for companies that have gone through so many permutations and acquisitions, it can't be verified that their targets even know who or what the salespeople represent.

"We've seen an increase in inquiries" about reverse mortgage practices, says Bronwyn Belling, a reverse mortgage specialist with the AARP Foundation, a Washington, D.C.-based nonprofit that advocates for people 50 years and over. "We're monitoring this closely."

To be sure, lending industry advocates point out that most reverse mortgages aren't fraudulent. And the AARP Public Policy Institute published research in December showing that 93% of more than a thousand borrowers it surveyed in 2006 reported that their reverse mortgages have had a mostly positive effect on their lives.

"The problem isn't in the reverse mortgage deal," says Peter Bell, president of the trade group the National Reverse Mortgage Lenders Association. "It's in the swindling of people's money, which they happen to get through the reverse mortgage deal."

Nonetheless, problems with these loans have been taking place.

"In contact with our field divisions, we have seen an increase in complaints (such as suspicious activity reports) about fraudulent activity involving the reverse mortgage" area, says William Carter, a spokesman for the FBI in Washington, D.C. He couldn't provide statistics because the FBI doesn't yet have a separate classification for these kinds of mortgages.

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