This article is timely and very relevant for the thousands of senior citizens that are victimized every day by insurance companies and their agents. If you are an senior citizen and someone is attempting to sell you a financial or insurance product, including annuities, long term care insurance or a reverse mortgage (to name only a few of the problematic financial products), I recommend that you do the following:

1) take your time and thoroughly investigate what you are purchasing, there should be no rush. If the agent is claiming that it needs to be done quickly, that’s a red flag

2) inform your family and friends and get their independent advice

3) do an internet search to see if there have been lawsuits brought against the company or other public grievances

4) find out if the person visiting your house is an insurance agent, if he/she is and they didn’t give you written notice 24 hours before visiting you that discloses they are an insurance agent their actions violate Calfornia law

5) look the agent or company up on your state Department of Insurance’s website, in California go to http://www.insurance.ca.gov/license-status/

The above are just a few steps you can take to protect yourself from elder financial abuse.

See the full story here:  CNN Money Article

Reverse Mortgages – Be Aware of the Hidden Costs?

By Ingrid Evans, Attorney

The Evans Law Firm, www.evanslaw.com

For more information or to speak to an attorney, please contact info@evanslaw.com or call us toll free 888.503.8267 for a free and confidential consultation.

REVERSE MORTGAGES - BE AWARE OF THE HIDDEN COSTS

Reverse Mortgage - What to Look Out For

Reverse mortgages are HIGHLY complex financial products that have serious consequences to the equity in your home. Here are some things to consider:

Reverse Mortgages are Loans - With a reverse mortgage, you are borrowing the equity accumulated in your home. That loan will need to be paid back by your heirs if you pass away or the house will be sold.

Reverse Mortgage Problems - A reverse mortgage may cause problems if you or your heirs want to keep the home or pay back the loan.

Some questions you should ask before entering a reverse mortgage:

How Much am I Borrowing? The higher amount you borrow, the higher amount of interest you accrue every month.

What is the Interest Rate on this Loan? Most reverse mortgages allow the lender to adjust the interest rate to a very high interest rate or the rate changes from a low rate to a high rate after several months.

What am I Paying for? Reverse mortgages have higher closing costs than regular mortgages. Such costs are typically paid for using the proceeds of the loan itself. This either decreases the amount of cash available for you, or forces you to borrow more. Some expenses and costs that come with reverse mortgages include:

• Pre-existing mortgages/liens
• Origination fees or broker commissions - which can be as high as 2% of the amount borrowed!
• Mortgage insurance premiums - which can be as high as 2% of the amount borrowed initially!
• Service release premiums and loan correspondent fees
• Recording fees, appraisal fees and other closing costs
• Repair rider fees and set-asides

What am I Still Paying for? You should know that you are still responsible for typical homeowner costs, such as:

• Property taxes
• Homeowner's insurance
• HOA fees
• Repairs to property

Watch Out for an Annuity! Some agents/brokers have attempted to commit sales fraud by convincing the borrower to use a reverse mortgage to buy an annuity or other insurance product. This is a red flag.

Reverse Mortgages - What YOU Can Do to Protect Yourself

There are a number of things you can do to protect yourself from fraud.

• Research the Product
• Ask what product you are buying, how it works, and how it will help you.
• Ask for a consumer brochure.
• Ask how much you are borrowing and what your interest rate will be.
• Go over the closing costs you will be paying for.
• Consult websites and resources related to senior financial planning to learn about reverse mortgages.
• Counselor - All HECM reverse mortgages, prior to closing, require borrowers to have a counseling session with an independent HUD counselor.
• Check Broker's Credentials - Some resources you can use to research the broker:
  • State Departments of Real Estate such as the State of California Department of Real Estate
  • SEC and FINRA (formerly NASD)
  • The internet - use any major search engine such as Google or Yahoo!

Watch out for agents who use phony certifications that misrepresent their actual qualifications or expertise. Always check to see if that credential is valid and matches that agent's expertise.

Some designations you should look out for:

• Certified Senior Advisor (CSA) - earned through three and a half-day course, where no college degree or prior financial experience is required.
• Certified Retirement Financial Advisor (CRFA) - earned through a four-day in-person or self-study course. College degree or prior financial experience is required.
• Certified Senior Consultant (CRC) - earned through a thirty-hour self-study course. An undergraduate degree and one year of experience in financial service is required.

Compare:

Certified Financial Planner (CFP) - A master of 89 topics in integrated financial planning. At a minimum, in order to earn this designation, an undergraduate degree is required, plus course training in the above topics, as well as passage of a ten-hour multiple choice exam.

If you have already entered into a reverse mortgage, here are some things you can do to make sure you understand your loan:

• Read Your Loan Documents - Below are certain loan documents you should look at under how the loan works and what you are paying for. If needed, consult a close friend/family member and reputable financial planner to help you.
• Good Faith Estimate Form - This estimates the amount borrowed and closing costs.
• Total Annual Loan Cost (TALC) Form - This estimates the total cost of the loan.
• Settlement Statement - This provides borrower's actual closing costs, amount borrowed, and cash amount disbursed to the borrower.
• Adjustable Rate Note - This explains how the loan works.
• Opt for the Free-Look Period - Most reverse mortgage products allow you a very short time period to rescind you loan.

If you believe you have been a victim, here are some steps you can take in California:

• Contact Seniors Against investment Fraud (SAIF)
• Report suspected unethical agents to the following public entities:
  • State Department of Insurance
  • Department of Real Estate
  • Department of Corporations
  • State Bar of California
  •  
• Consult an attorney

For more information or to speak to an attorney, please contact info@evanslaw.com or call us toll free 888.503.8267 for a free and confidential consultation.

About The Evans Law Firm

The Evans Law Firm is a plaintiffs’ firm concentrating on elder abuse (physical and financial), consumer fraud class actions involving, particularly insurance and banking claims,  consumer product liability and personal injury/wrongful death cases, particularly asbestos-mesothelioma, pharmaceutical product liability, negligence personal injury claims, as well as qui tam (whistleblower/false claims) and employment discrimination litigation.

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