Reverse Mortgage Scams and Protections
Reverse mortgage borrowers should watch for pressure, confusing promises, contractor tie-ins, investment pitches, and anyone discouraging counseling or independent advice.
Before you decide
- Pressure and urgency are warning signs.
- Borrowers should verify licensing and use counseling resources.
- Reverse mortgage proceeds should not be tied to a forced purchase or investment pitch.
Common Red Flags
Be careful with anyone who says the decision must happen immediately, discourages family or advisor involvement, minimizes obligations, or connects loan proceeds to a separate product the borrower does not understand.
How To Slow Down
Verify licensing, read disclosures, complete counseling, compare alternatives, and invite a trusted family member or advisor into the conversation when appropriate.
Why Slowing Down Helps
Good mortgage education should help homeowners avoid bad outcomes, not only explain how to apply.
Common Questions
Can a reverse mortgage pay off my existing mortgage?
A reverse mortgage may pay off an existing mortgage at closing if the homeowner qualifies and available proceeds are sufficient after program calculations, liens, and costs.
Do I still own my home with a reverse mortgage?
The homeowner keeps title to the home, but the reverse mortgage is a loan secured by the property and the borrower must keep meeting loan obligations.
When should a homeowner avoid a reverse mortgage?
A reverse mortgage may not fit if the homeowner expects to move soon, cannot keep taxes and insurance current, cannot maintain the home, or has better alternatives after reviewing the full household plan.
Keep reading
HECM borrowers must complete counseling with a HUD-approved reverse mortgage counselor before the loan can close.
When To Avoid a Reverse MortgageA reverse mortgage may be a poor fit if the homeowner plans to move soon, cannot maintain property charges, needs short-term cash only, or has a better lower-risk option.
Licensing and DisclosuresBefore sharing personal mortgage information, you should be able to verify licensing, company information, Equal Housing language, and the limits of educational content.
Where this information comes from
Federal Trade Commission - regulator
https://consumer.ftc.gov/articles/reverse-mortgagesConsumer Financial Protection Bureau - regulator
https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/U.S. Department of Housing and Urban Development - official
https://www.hud.gov/program_offices/housing/sfh/hecmReviewed by Nick Cunningham, NMLS #907393. Last reviewed 2026-06-07.
Educational information only. Not personal financial, legal, tax, or benefits advice.