Reverse Mortgage Scams and How to Spot Them

Not every sales pitch for a reverse mortgage should be worth your time.

People aged 62 or older are the target demographic for reverse mortgages — a tool that can tap their home’s equity for cash. But they should be wary of scams amid the legitimate reverse mortgage products available.

In general, older people are more vulnerable to financial fraud because they live alone, according to the National Adult Protective Services Association (NAPSA) and the Women’s Institute for a Secure Retirement.

Indeed, people aged 60 and older had more scam complaints than any other age group in 2025, according to the latest data available from the Internet Crimes Complaint Center of the Federal Bureau of Investigation. In total, there were 201,266 complaints and $7.7 billion in total losses for this age group. 

If you’re interested in a reverse mortgage but want to make sure your finances stay safe, CNBC Select outlines what you need to know, the archetype of six common reverse mortgage scammers, how you can protect yourself and lenders you can trust. 

First, any balloon payment is riskier than a loan you repay over time because of the large sum due at once. Second, as a reverse mortgage borrower, you must stay up to date on renovations, insurance payments and taxes. If you don’t, the loan will come due, and you’ll be stuck with a massive bill.

As with any other type of mortgage, the lender can claim your home if you fail to make this large payment and force a foreclosure sale.

Protections for reverse mortgage borrowers 

Because people taking out reverse mortgages may be more vulnerable to scams and other risks associated with this type of loan, the federal government has more guidelines and regulations for the reverse mortgage industry than for any other type of home loan. 

The federal government mandates that anyone taking out a HECM meet with a Department of Housing and Urban Development-backed counselor to ensure the borrower understands the risks and is financially able to maintain the payments necessary to avoid the loan coming due earlier than anticipated. The counselor will give you a certificate that you must show to your lender to get a loan. 

While this is not federally required for borrowers taking out proprietary mortgages not insured by the FHA, most state and local governments also require it for these loans. 

Seeking out counseling with a HUD-certified official as a first step is a great way to avoid potential scams. You can find a list of these counselors on HUD’s website. 

Who they’ll be: Someone who is “assisting” you with your loan — a lender or a third-party associate; someone who sends you a loan advertisement.

What they could say: 

• They will tell you that you’ll only be able to get a certain reverse mortgage deal if you put the proceeds from your loan into one of their accounts or buy one of their policies or that you need to pay them before even starting the loan process. 

How they may try to scam you: There are several ways the nickel-and-dimer could try to get money out of you. They could: 

• Force you to put your money into one of their accounts or to buy an insurance policy to access the funds—this is illegal and should be an automatic red flag. 
• Tack on exorbitant fees before the application process has even started or tell you that you must buy a certain product for their help in assisting you with the loan. 
• Tell you you’ll save money by using their product, only to charge closing costs that ultimately set you back. 

How to avoid it:

• Stick with reputable lenders. 
• Always consult a trusted financial advisor and a HUD-approved housing counselor before going forward with a deal. 
• Watch out for extreme language and any lender that tells you you can avoid certain fees and costs altogether. This could be a red flag. 
• Stop working with anyone who is telling you that you must buy a certain product to access a reverse mortgage

Scammer type 4: The upselling contractor 

Who they’ll be: A contractor who you’ve never met before that writes you a letter, calls you or knocks on your door. 

What they could say: 

• They will tell you that your home has dangerous structural issues that need to be fixed right away and, if you can’t afford it, you should consider a reverse mortgage

How they may try to scam you: 

• They’ll pressure you into taking out a reverse mortgage for projects you don’t need.
• They’ll take your money and never do the work. 

How to avoid it:

• Get a second (or third) opinion if a contractor tells you your home is unsafe. 
• Speak with a housing counselor to figure out the best steps forward if you do conclude that there is a major construction issue with your home. 
• Ask to see a contractor’s license and verify credentials. It’s a red flag if they refuse to show it to you. 
• Don’t go with a lender just because your contractor suggests it. Always talk to your housing counselor. 
• Be wary of anyone pressuring you into a reverse mortgage. 

Scammer type 5: The equity thief

• Who they’ll be: Any person pressuring you to give them personal financial information, invest in a project using proceeds from a reverse mortgage or sign away the power over your home. They may also be appraisers and loan officers working in tandem. 

• What they could say: They ask you to temporarily sign your loan over to them or add them to your deed, they are flipping a house, and  if you invest with funds from a reverse mortgage, they will give you a portion of the proceeds when they sell the home at a profit. Your home is worth more than expected and ask you to take out a reverse mortgage. 

• How they may try to scam you: They’ll convince you to take out a reverse mortgage, then steal the money and leave you on the hook for repayment. 

Scammer type 6: The veteran reverse mortgage imposter 

• Who they’ll be: A company that reaches out to you through phone, email or mail claiming to offer a special government-backed reverse mortgage product for veterans. This does not exist.

• What they could say: They will say you can get a reverse mortgage backed by the Department of Veterans Affairs or a VA reverse mortgage. 

• How they may try to scam you: These impostors will promise you something that doesn’t exist and often charge fees or even steal your financial information.

Here is a list of guidelines you should follow when taking out a reverse mortgage. CNBC Select gathered this information from prior reporting and prevention tactics outlined by the Department of Housing and Urban Development Office of the Inspector General: 

• Do your research and work with a reputable lender: Always stick with a lender that is well-rated by third-party companies like the Better Business Bureau. Plus, check out customer reviews on sites like Trustpilot to see what customers have to say. 
• Always get multiple quotes and a second opinion: With all types of mortgages, you should apply with two to five lenders, even if it’s just to make sure you’re getting the best deal. You should also get a second opinion when working with a contractor or other service provider. 
• Talk to a HUD-certified housing counselor: It’s a federal requirement to meet with a HUD-certified housing counselor if you’re taking out a HECM. But even if you decide on another type of reverse mortgage, make sure to chat with a trusted and third-party expert aimed at helping you make the best decision with you. They can help you gut-check whether a deal is right for you. 
• Never give sensitive information on the first meeting, or in initial contact through mail, email or phone: You never need to rush into a reverse mortgage, and you shouldn’t. If someone is pressuring you to apply upon first contact — before you have time to do your due diligence — you should be cautious and never give them information before investigating. 

If you’re looking for low rates, we suggest looking at Longbridge Financial. It has lower-than-average rates and doesn’t charge a servicing fee, which can be $35 per month. It also has discounts for active service members and veterans. 

If you want to manage your finances with in-person assistance, you should consider Mutual of Omaha. It has dozens of locations across the country — more than many lenders on this list.

If speed is your priority, check out Fairway. It claims to be able to close on a reverse mortgage in 17 days — compared to the one or two months most lenders take. 

Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed financial decisions. Every mortgage review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of home loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.