Is a Reverse Mortgage a Scam? How to Check an Offer
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No. A reverse mortgage is a real home loan from a private lender that lets an older homeowner (62 or older for a HECM) turn home equity into cash, and the most common kind, the Home Equity Conversion Mortgage (HECM), comes with HUD-approved counseling before a lender can process your application. Scammers do target reverse mortgage borrowers, though, so it pays to know the warning signs and check any offer before you sign. Like any loan, it has to be repaid: you keep paying property taxes, homeowners insurance, any HOA dues and upkeep, the balance grows as interest and fees are added, and the loan comes due when the last borrower dies, sells the home or moves out for good, or sooner if the taxes, insurance or upkeep fall behind. An eligible non-borrowing spouse may be able to stay in the home.
Last updated November 10, 2026Why reverse mortgages draw scams
The CFPB says scammers target older homeowners through reverse mortgage schemes, often reaching them through community groups, investment seminars and TV, radio, billboard and mail advertising. Many people don't find out until the loan money is gone. A CFPB study of reverse mortgage ads also found that some homeowners came away thinking the money was interest-free or a government benefit for seniors. It isn't: a reverse mortgage is a loan, with fees and interest that are repaid when the loan comes due.
Warning signs
Slow down if you hear any of these:
- "I'm the only one you need to talk to." The CFPB calls this a warning sign. Talk to a few lenders before you decide.
- A contractor says a reverse mortgage is the best way to pay for repairs. The CFPB lists high-cost repairs and home improvements among the pitches scammers use.
- Someone wants you to invest the money or buy an annuity. Nobody can require you to buy an annuity, insurance or a similar product to get a HECM, apart from the usual homeowners, flood and title insurance. The CFPB says not to plan on investing the loan money.
- Someone asks you to sign over the loan money, or to sign a power of attorney that gives them sole access to it. HUD-approved counselors are required to warn borrowers against signing their funds over to a loan officer or anyone else involved in the loan.
- A relative or caregiver is pushing you to apply, or is handling the loan for you without you there. The CFPB lists family and caregiver pressure, and people using an older homeowner's identity, among reverse mortgage schemes.
- Someone charges for basic information. HUD warns about scam artists who charge for information that's free from HUD.
- Promises that sound too good, like "no payments ever" or "you can't lose your home." You can lose the home if the taxes, insurance or upkeep fall behind, or if it stops being your principal residence.
- Pressure to sign today. Don't let anyone rush you. A lender can't even process a HECM application until you've finished HUD-approved counseling.
How to check an offer before you sign
1. Talk to a HUD-approved reverse mortgage counselor. HECM counseling has to come from a counselor on HUD's HECM counselor roster, and the lender can't process your application until you've had it. Search HUD's roster or call (800) 569-4287. An agency may charge a fee, but it has to be reasonable and can't create a financial hardship for you, and HUD's counselor list is free. 2. Check the company and the loan officer. The Nationwide Mortgage Licensing System & Registry (NMLS) runs a free lookup, NMLS Consumer Access, that shows whether a company or loan officer is authorized to do business in your state. Your state regulator can tell you about any disciplinary action. 3. Compare a few lenders. Ask each for its costs and terms in writing, and read what you'd be agreeing to keep doing, not just what you'd receive. 4. Know who gets the money. The loan money comes to you, or pays off an existing mortgage, by the ways you choose with your lender. Don't hand control of it to a salesperson, a contractor or a relative. 5. Use your time to cancel if you need it. On a reverse mortgage taken out on a home you already own, you generally have until midnight of the third business day to cancel, in writing, counted from the latest of closing, getting the cancellation notice, or getting the required loan disclosures. A reverse mortgage used to buy a home doesn't come with that right.
If you think it's a scam
- Elder fraud: call the National Elder Fraud Hotline at (833) 372-8311, weekdays 10 a.m. to 6 p.m. Eastern.
- A HECM lender: contact HUD at [email protected] or (800) 225-5342.
- Any mortgage company: submit a complaint to the CFPB at consumerfinance.gov/complaint or (855) 411-2372.
- Fraud or a scam pitch: report it to the FTC at ReportFraud.ftc.gov.
If you already have a reverse mortgage and something looks wrong, call your servicer first. See who to contact about an existing reverse mortgage.
Where FreeRateUpdate fits
FreeRateUpdate is a licensed mortgage broker that connects people with participating lenders and brokers. FreeRateUpdate does not take loan applications, negotiate loan terms, make credit decisions, or fund or service loans. Whoever you talk to, the steps above work the same way: counseling first, check the license, compare offers, and never sign under pressure.
Most of this applies to Home Equity Conversion Mortgages (HECMs), the most common reverse mortgage. A proprietary reverse mortgage follows its own loan terms, and the same warning signs apply.
| Is a reverse mortgage a scam? | No. It's a home loan from a private lender, for older homeowners (62 or older for a HECM) |
|---|---|
| Does it have to be repaid? | Yes, when the last borrower dies, sells the home or moves out for good; an eligible non-borrowing spouse may be able to stay |
| Is counseling required? | Yes, HUD-approved counseling before a lender can process a HECM application |
| Find a counselor | HUD's HECM counselor roster, or (800) 569-4287 |
| Check a company or loan officer | NMLS Consumer Access, and your state regulator |
| Can you be required to buy an annuity or insurance? | No, apart from the usual homeowners, flood and title insurance |
| Time to cancel | Usually until midnight of the third business day after the latest of closing, the cancellation notice or the loan disclosures, on a home you already own |
| Report elder fraud | National Elder Fraud Hotline, (833) 372-8311 |
| Complain about a HECM lender | HUD, [email protected] or (800) 225-5342 |
Related questions
Sources
- https://www.consumerfinance.gov/archive/blog/avoid-reverse-mortgage-shopping-scams/
- https://www.consumerfinance.gov/archive/newsroom/consumer-advisory-dont-be-misled-by-reverse-mortgage-advertising/
- https://www.hud.gov/hud-partners/single-family-hecmhome
- https://www.hud.gov/sites/default/files/hudclips/documents/76101HSGHBK.pdf
- https://www.law.cornell.edu/uscode/text/12/1715z-20
- https://www.law.cornell.edu/cfr/text/12/1026.23
- https://www.consumerfinance.gov/ask-cfpb/is-there-any-way-i-can-check-to-see-if-the-company-or-person-i-contact-is-permitted-to-make-or-broker-mortgage-loans-en-133/
- https://ovc.ojp.gov/program/stop-elder-fraud/providing-help-restoring-hope
- https://reportfraud.ftc.gov/
Sourced from licensed loan officers and brokers in the FreeRateUpdate network.
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.