The HECM itself is one of the most tightly regulated consumer loans in the country — mandatory counseling, FHA oversight, capped fees. Fraud rarely involves the loan mechanics. It involves who gets the money.
1. The annuity or investment cross-sell
Someone urges you to take a lump-sum reverse mortgage and invest the proceeds in an annuity or insurance product. This is prohibited for HECM originators and it is the classic senior equity-stripping scheme: you pay interest on borrowed money to buy an illiquid product that pays the seller a large commission. Walk away.
2. Contractor-driven applications
A home repair company shows up unsolicited, finds urgent problems, and offers to arrange reverse mortgage financing. The repairs are overpriced, sometimes never completed, and the loan is real. Never let a contractor originate or coordinate your financing.
3. Pressure to skip or rush counseling
HUD counseling is mandatory and independent. Anyone suggesting you can "get around" it, or steering you to a specific counselor they have a relationship with, is committing a violation. Choose your own from the HUD-approved list.
4. Deed transfer requests
You never transfer title to a lender in a reverse mortgage. You remain the owner. Any request to sign a grant deed, quitclaim, or transfer to a trust the other party controls is theft.
5. Fake "government program" mailers
Mailers designed to look like HUD or FHA correspondence, sometimes with official-looking seals and a deadline. FHA insures reverse mortgages; it does not solicit you for them.
6. Foreclosure rescue offers
Homeowners behind on payments are targeted with promises that a reverse mortgage will solve everything, with upfront fees required. Advance fees for loan modification or rescue services are illegal in California.
7. Refusal to put terms in writing
Margin, origination fee, total closing costs, and net proceeds should all appear in writing before you commit. Verbal-only quoting is a red flag on its own.
How to verify anyone you talk to
- Look up their NMLS number on NMLS Consumer Access. Ours is NMLS #855360.
- Confirm the company is licensed to lend in California
- Bring an adult child or trusted advisor to every meeting
- Report suspected fraud to the CFPB, the California Department of Financial Protection and Innovation, and HUD
A legitimate lender will never object to you slowing down, asking questions, or involving your family. Ask us anything.