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Reverse mortgage scams: protecting a parent from fraud, pressure and dementia risks

By Tom Jarboe, NMLS #210600Facts checked November 3, 2026

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This page is for adult children, friends and the parents themselves. Older homeowners make sound decisions about their homes every day. Scammers go after home equity, not age, and the steps below protect anyone. This is general information, not legal advice.

Want to know what this means for your home? Get your personal estimate from Tom →

Who's pushing, and what they want

These are the patterns federal regulators have warned about.

Some property-tax scams also target older homeowners. For example, a California county tax office warned in 2026 that there is no IRS "Form 1098-SR," even though scammers claim one freezes property taxes. If a letter or caller offers a special tax form or program for a fee, check with your county tax office first.

What the law forbids (and what it requires)

• No tie-in sales. Under federal HECM law and California Civil Code 1923.2, no one involved in originating the loan can require your parent to buy an annuity or other financial or insurance product. They also can't refer your parent to buy one before closing, or before the right to cancel ends. Title, hazard and flood insurance are the exceptions.
• No commissions on other products for the loan officer. On a HECM, the loan officer may not be involved with, or get an incentive to sell, any other financial or insurance product to the borrower.
• Independent counseling. Counselors can't be connected to, or paid by, anyone involved in the loan or anyone selling annuities, investments or insurance. California also requires the lender to give a list of at least 10 HUD-approved counseling agencies, and your parent picks.
• A 7-day wait. In California, the lender can't take a final application or charge any fee until 7 days after counseling, for any reverse mortgage. See counseling near Diamond Bar.
• A notice in large type. Before counseling, California requires the lender to give a printed notice in 16-point type. Among other things, it says senior advocacy groups advise against using the money to buy annuities.
• Translation. If the lender negotiates mainly in Spanish, Chinese, Tagalog, Vietnamese or Korean, California requires a written translation before signing (Civil Code 1632).
• A 3-day right to cancel. Most reverse mortgages that aren't home purchases can be canceled until midnight of the third business day after closing. See getting out of a reverse mortgage.

Private (proprietary) loans such as HomeSafe set some of their own rules, but California's counseling, 7-day wait and tie-in rules apply to any reverse mortgage. A HECM is insured by FHA, and that insurance protects the lender, not your parent. New American Funding is not acting for HUD, FHA or any government agency.

Questions about your own situation?

Talk with Tom Jarboe. He's been helping families with home loans since 1986. You'll get plain answers, and he'll tell you if a reverse mortgage isn't the right fit.

Call Tom: (909) 869-6588Get my personal estimate

Red flags to watch for

Here's what I'd watch for:

• Someone your parent met at a free lunch, a seminar or through a cold call is suddenly driving the decision.
• The talk is about what to do with the money (an annuity, an investment, a "safe" account) more than about the loan.
• Your parent is told not to tell family, or family is kept out of meetings.
• The paperwork arrives already filled in, or your parent is told to sign blank pages.
• Someone offers to "handle" the counseling, or the counselor was picked for your parent.
• Money from the loan is moved to a new "helper," caregiver or relative.
• Your parent can't explain, in their own words, that it's a loan, that the balance grows over time, that taxes, insurance, HOA dues and upkeep stay theirs, and that the loan comes due when the last borrower dies, sells, moves out for good (or is away more than 12 months in a row for illness), or doesn't meet the loan terms.

How families can help, with respect

Your parent decides. Your job is to make sure the decision is theirs, made with clear information.

1. Ask to be included. Ask your parent whether you can join the meetings with the lender and the counselor. It's their call.
2. Ask your parent to explain it back. The questions are simple: What is the loan for? What happens to the balance? What bills stay yours? When does the loan come due?
3. Read California's worksheet together. Before counseling, California has lenders give a worksheet with five questions: who else lives in the home, the risk of falling behind on taxes, insurance and upkeep, other options, using the money for financial products, and the effect on benefits like Medi-Cal.
4. Get everything in writing. Costs, the payout option, and what happens when the loan comes due. See what it costs.
5. Slow down. The 7-day wait is there for a reason. Use it.

Memory loss, capacity and power of attorney

Signing a loan takes the ability to understand it. Whether a person had that ability on a given day is a legal question, and the answer depends on the facts. If you're worried, talk to an elder law attorney before any papers are signed.

Tom's advice: set up a durable power of attorney or a living trust while your parent can still sign. See power of attorney and conservatorship.

• Before there's a problem. A durable power of attorney for finances lets a trusted person act on your parent's behalf later. A trust is another tool. An elder law attorney can explain which fits. The CFPB has free guides for people named as agents, trustees and conservators. Ask any lender early whether it will accept the document you have.
• If your parent already has a reverse mortgage and memory is slipping. The loan doesn't change because of a diagnosis. But someone needs to keep the property taxes, homeowners insurance, HOA dues and upkeep paid, answer the servicer's yearly occupancy certification, and watch the mail. If your parent moves to care, the loan can come due after more than 12 months in a row away for illness, if no other borrower lives there. See occupancy rules and if your parent has a reverse mortgage.
• If you think your parent signed when they shouldn't have. Call an elder law attorney quickly. Some rights have deadlines. For example, if the required cancel notice or disclosures weren't given, the right to cancel can last up to 3 years, but that needs a lawyer's review.

Where to report

If someone is in danger right now, call 911.

You don't need proof to call APS. Any person may report suspected abuse of an elder or dependent adult. The FTC also suggests telling the counselor, the lender or the loan servicer if you suspect fraud. The Eldercare Locator (1-800-677-1116) can point you to local aging services.

Made-up example: This is a made-up example. Mrs. Kwan and David are not real people.

Mrs. Kwan, 81, lives in Rowland Heights. After a free lunch seminar, a man she met there calls her several times about a reverse mortgage. He says she should put the money into an annuity "so it grows," and that she should sign this week.

Her son David notices the brochures and asks to join the next call. The man doesn't want family on the call. David and his mother read the FTC's warning together, and she decides to walk away. They report the calls to ReportFraud.ftc.gov.

Later, Mrs. Kwan still wants to learn about her options. She picks an independent HUD-approved counselor from HUD's list and asks whether a counselor who speaks Mandarin is available.

With David in the room, she explains in her own words that it's a loan, that the balance grows, and that her property taxes, insurance and upkeep stay hers. She takes the full 7 days before deciding anything.

Rather talk it over than read? Call Tom, no pressure: (909) 869-6588 →

Questions families ask

Your next step

Talk with me first, and bring the family. Families are always welcome in my meetings, there's no pressure, and I'll never ask your parent to buy anything else. I'll tell you plainly if a reverse mortgage isn't the right fit, and if something feels wrong, I'd rather you walk away. Call (909) 869-6588 or email [email protected]. About me

Before you can apply for a HECM, you'll meet with an independent HUD-approved counselor. It's required, and I'll give you a list of agencies. In California there's also a 7-day wait after counseling before a final application or any fees. Find one on HUD's site or call (800) 569-4287.

The counselor is also a strong safeguard for any family. They are independent, and New American Funding does not choose or pay them.

Talk with Tom

Tom Jarboe, Regional Sales Manager, New American Funding, NMLS #210600, Diamond Bar.

As a loan officer, I want you to be able to check everything. That's why I give you honest answers on both sides, cite the official rules, and make sure you meet an independent HUD-approved counselor before you apply. My goal is that you make an honest, educated decision. More about me.

Related guides

• HeirsWhat happens to a reverse mortgage when a parent dies?Read →
• Helping a parentMy parents have a reverse mortgage. What should I do now?Read →
• Moving to careMoving to care, living elsewhere part of the year, or renting a roomRead →