February 15, 2011
In our last blog post we discussed FHA Reverse Mortgages and the scammers who try to prey on people who want to apply for such mortgages. The FHA issues regular warnings against paying for services and information that’s available for free from the FHA.
Some third-party companies are fairly brazen in their attempts to sell services or information that’s available free of charge, others are a bit more subtle in the approach, blurring the lines between scam and legitimate customer service.
Some estate planning companies may try to charge seniors for free information available from the FHA. These charges may not be for data or services that stand alone and are easily identified once the facts are known; some try to “bundle” the free information in with other data or services.
A potential FHA Reverse Mortgage borrower may not be able to tell when such bundling occurs, but the FHA does warn borrowers, “FHA does NOT recommend using any service that charges a fee for referring a borrower to an FHA lender. “
Charging a referral fee for putting a HECM loan applicant in touch with a participating FHA lender should be a red flag to anyone considering an estate planning service. The practice is unscrupulous for a very simple reason. From the FHA, “FHA provides this information free, and HECM housing counselors are available for free or at very low cost, to provide information, counseling, and a free referral to a list of FHA-approved lenders.”
While it’s true that some housing counselor services do cost money, a borrower in doubt can contact the FHA directly to learn what costs should be considered reasonable or typical and which are not. You can call toll-free (800) 569-4287 to get help finding a HUD-approved housing counseling agency near you. The FHA also provides a free HECM Counseling Agency Locator service.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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