Seniors need to be wary of con artists

Home owners facing mortgage payment problems too often are easy prey for con artists and senior citizens in particular need to be extremely vigilant.

That was just one of the tips offered to the hundreds of senior citizens who turned out recently for a special seniors housing seminar offered by the Southland Regional Association of Realtors.

Fraud, reverse mortgages, senior legal issues and property tax exclusions available to seniors were the topics presented by a panel of speakers that included: Lisa Lucero, Los Angeles County Assessor’s office; David Fleck, Los Angeles County Deputy District Attorney; Debbie Lee, a Wells Fargo reverse mortgage specialist; and Mitchell A. Karasov, an attorney specializing in senior legal issues.

• Reverse mortgages — Lee, an expert on reverse mortgages, told attendees that credit scores are irrelevant when considering applying for a reverse mortgage.

Why? Because the loan is not based on the borrower's credit history, but instead is linked to equity built up in the borrower’s home.

Funds obtained from a reverse mortgage can be used for any purpose — fund a grandchild’s education, buy a new car, pay for long-term health insurance or care, or even take the long-delayed vacation to Venice. Repayment is not a concern until either the property is sold or the borrower dies. While most reverse mortgage loans are relatively modest and meant to provide a monthly stipend for the borrower, some loans soar into the millions of dollars.

“The largest reverse mortgage we’ve done is on an $11 million property in Santa Barbara,” Lee said. “We also issued a $2.4 million reverse loan on a home in Malibu.”

Most reverse mortgage come with an adjustable interest rate, although a new product offers a fixed-rate reverse loan, which may or may not be in the borrower’s best interest, Lee said. Over the last 20 years, she said, reverse mortgages have had an average interest rate of 7 percent, but the interest rate as of the presentation at the Southland Regional Association of Realtors stood at about 5.6 percent.

“A reverse mortgage is not for everybody,” Lee said. “We have to look at the need and the reasons why you want the loan. … If you’re planning on selling anytime soon, a reverse mortgage might not be the way to go.”

• Predatory lending, mortgage fraud — David Fleck, a deputy in the Los Angeles County District Attorney’s real estate fraud unit, said that the local unit has an unusually large staff of 21 people who focus on real estate fraud-related issues.

Yet even with that many people, “we’re still backlogged and the Los Angeles Police Department is one year behind on investigating complaints,” Fleck said. “We’re still just getting the low-hanging fruit.”

In too many instances, people wind up with their home in foreclosure for a loan they never applied for and never received, he said.

“From a law enforcement perspective, there are a lot of crooks out there,” Fleck said, “but it still is not likely that the typical home owner will ever experience real estate fraud.”

Yet, he said, anyone can be a victim. Con artists come in all races, genders, ethnic groups, and the scam typically begins in an innocent way. Two of the most common types of fraud involve mortgage foreclosure fraud and what is known as predatory lending. In one instance, the con artist walked throughout a neighborhood with his son, stopping to chat with owners of homes that he knew from advance research were late on payments and on the verge of foreclosure.

Initially, nothing was said about the real estate market and the conversation revolved around supposedly shared interests. But after a second or third “chance” meeting, perhaps in answer to a question about his line of work, the con artist lets it slip that he specializes in foreclosure rescue.

Before long, the con artist has convinced the home owner to take out a predatory loan with him or sign documents that open the door to the outright theft of the property.

“Use this rule of thumb,” Fleck said. “If you didn’t call them, you don’t want to talk to them. If you need to refinance for any reason, ask a friend or a relative for a referral.”

Anyone who believes they may have been a victim of a real estate fraud should file a police report, hire a civil attorney who can take immediate steps to protect the title to the house, and contact the L.A. County District Attorney’s real estate fraud section by calling 213-580-3322.