The Academy of Florida Elder Law Attorneys publishes a monthly newsletter for consumers, ElderSmarts, to give seniors and their families tips on how to recognize and protect themselves from financial scams. It also offers budgeting tips.
The Miller Elder Law Firm is a member of AFELA and would like to share this information with the seniors in our community.
Goal of ElderSmarts: Be S.M.A.A.R.T. Seniors
Stop! Take time to think through any financial decisions you make.
Make decisions on your own time.
Avoid businesses that contact you directly.
Ask questions about any financial deal you make.
Research your options before making decisions.
Talk to people you trust before making a financial decision.
Highlights From January 2016 Newsletter: Click Here To Read Full Newsletter
Predatory Mortgage Loans
Predatory lenders often try to take advantage of seniors by offering loans secured by your home. These loans have high interest rates and hidden or excessive fees, which may cause you to fall behind on your loan payments and face foreclosure.
Common Predatory Loan Scams
1. Foreclosure Rescue. In this scam, a “specialist” will offer to work on behalf of a client who is close to foreclosure in order to save the home. In reality, this person charges a high fee to make some phone calls or complete paperwork that the homeowner could do on his own.
2. Lease/Buy Back. This scam involves a homeowner who is lured into signing over the deed to their house to a person who tells them they can remain in the home as a renter and eventually buy it back. The homeowner is often unable to buy the home back.
3. Non-Traditional Products. Sometimes lenders offer loans in which the payments do not cover the principal and interest due on the loan. The loan balance and payments continue to grow until the homeowner is unable to make payments and faces foreclosure.
4. Deceptive Loan Servicing. A lender may provide inaccurate account statements and fail to properly apply the loan payments making it impossible for you to tell how much you’ve paid. You may end up paying more than you owe.
How Do Seniors Protect Themselves:
- Understand the interest you are paying. The mortgage may start with a low rate that increases after the introductory period.
- Beware of high closing costs and fees.
- Ask about prepayment penalties. These allow the lender to make more profit if the homeowner needs to refinance.
- Get help if you are asked to refinance a loan. Lenders may offer to refinance the loan for a large fee when the senior is at risk of default.
- Understand steering and targeting. Predatory lenders sometimes target seniors who they believe will not be able to repay the loans.
- Those already facing financial problems with their home are especially susceptible to other predatory tactics looking to take advantage of their vulnerability.
Read the entire newsletter here.