Scams and swindles on the rise for reverse mortgages
Reverse mortgages have become increasingly popular and of course, so are the scams and swindles. And if it wasn't so sad that older Americans are being preyed on by the scamsters and swindlers, you might even laugh at some of the goings on (and I'll give you something to lighten your day). But don't forget that reverse mortgages are insured by the government and that means taxpayers are once again on the hook for mortgage fraud.
From WSJ, Mortgage Fraud: A Classic Crime's Latest Twists
"Available to people 62 and older, reverse mortgages allow homeowners to convert their home equity into cash. Instead of writing a check to the bank each month, the bank pays the homeowner, who can elect to receive a lump sum, a line of credit or monthly payments. The loan is repaid, with interest, when the borrower dies, moves, sells the house, or fails to pay property taxes or homeowner's insurance."
And the humor comes from this character: (my emphasis added)
"Thomas Prusik Parkin, of Brooklyn, N.Y., allegedly went a step further. In April, according to local prosecutors, Mr. Parkin received a reverse mortgage in his mother's name—despite the fact that Irene Prusik has been dead since 2003. Mr. Parkin withdrew some $463,000 of the $600,000 available under the loan's line of credit, using it for expenses including tax liens on the roughly $1.5 million home he continued to claim title to, even after a 2003 foreclosure, prosecutors say.
Prosecutors also state that Mr. Parkin pocketed some $52,000 of his deceased mother's Social Security and thousands more in other government benefits she qualified for. Dennis Ring, deputy bureau chief in the rackets division of the Kings County District Attorney's Office, says Mr. Parkin maintained the fiction his mother was alive by giving the funeral director who completed her death certificate a false Social Security number and date of birth; thus, "under her legitimate information, there was no death certificate on file," Mr. Ring says. Occasionally, Mr. Parkin would also don a dress, cane and oxygen mask to disguise himself as Irene Prusik, Mr. Ring adds. Mr. Parkin pleaded not guilty, and his attorney declined to comment. He is being held on $1 million bail."
Photo courtesy of Flickr by jepoirrier