Red Flag #8. Borrowers should not pay a referral fee for an agent just for the privilege of introducing you to a lender. That fee has been as much as 10% of the loan amount in some cases. Don't pay referral fees or finder's fees for reverse mortgages just find a new agent or broker.

Red Flag #9. You don't know your lender. Laws and recourse vary from state to state. It's a good idea to know your lender. Get referrals from family and friends and ask for references from the agent you are talking with.

Red Flag #10. HUD might be a DUD. Now this may come as a surprise but just because Uncle Sam is involved in your reverse mortgage doesn't mean it is a safe or a wise decision for you. HUD does provide some helpful and free info on its website but it is very limited. If the sales rep says this loan is safe because it's backed by the U.S. Government, don't be overly impressed.

Red Flag #11. Information is withheld. When Total Annual Loan Costs (TALC) rates are not disclosed, be careful. When information is withheld and real costs and fees are not fully explained up front, there's trouble on the horizon.

Red Flag #12. If a borrower's ability to make a major decision is in anyway questionable, everyone including the agent, the lender, and family members should slow down and get additional professional assistance. If you are dealing with agents and lenders with any degree of integrity they will certainly offer any senior who doesn't understand the consequences of the reverse mortgage, the resources and time to get more assistance. Families should work together to keep tabs on senior family member's financial needs and lend a helping hand and a second set of eyeballs to major financial decisions such as reverse mortgages.

Red Flag #13. Alternatives to reverse mortgages are not known. There are several safe and secure alternatives that should be considered.

The bottom line to reverse mortgages is this. There are reverse mortgage alternatives beyond lines of credit or selling your home. Get the facts, recognize the red flags and take the time to do your homework.

Elder abuse is a major concern for financial products with seniors and the best way to fight it is to punish unethical lenders and teach consumers the facts and the alternatives. Families need to keep closer tabs on senior members and do the homework when it comes to reverse mortgages.

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