NCOA National Council on Aging

Help With Decision Making

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Scam Meter Quiz

Take this scam meter quiz to find out how vulnerable you may be to scams.

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Key Questions to Consider

What is the best way to protect home equity from scams?

Older homeowners are often the target of fraudulent lenders. Protect yourself by becoming familiar with the more common scams carried out through loans, home improvement schemes, mortgage service abuses, and other practices.

Check the Federal Trade Commission booklet Home Equity Loans: Borrowers Beware! for examples of lender practices that can put you at risk of losing your home. 

Who can I trust to help me with mortgage problems?

Look for a reputable credit counseling agency through the National Foundation for Credit Counseling. Member agencies provide free or low-cost individualized, confidential credit counseling.

Should I tap my home equity to get money to invest?

Be very skeptical of anyone who urges you to refinance your home or obtain a reverse mortgage to purchase an investment or insurance product, like a deferred annuity, particularly if he or she promises high returns. Consider the impact on your financial situation if the returns turn out to be less than promised or, worse, if you lose the principal.

If you cannot afford to lose the money or your home, you should not make investments with your home equity.

Should I share home equity with a caregiver to pay for help at home?

Older homeowners are sometimes the victim of caregivers who offer to provide services in exchange for home equity. The only document you should sign with a caregiver is an employment agreement. Never tie compensation to a caregiver with a lien against your home.

If you have devoted caregivers that you want to reward, consider leaving them a specific legacy in your will, without letting them know that you have made such arrangements.

How can I protect myself against financial fraud?

Visit FINRA’s SaveAndInvest.org to learn about financial scams and strategies to avoid them. Once you learn the basic tactics used by unscrupulous people, it will be easier to protect yourself and your home.

Cost Concerns

How can I protect myself from phone scams?

The first line of defense is having and using caller ID. If the phone number is blocked or you do not recognize the number, consider letting the caller leave a message. Then you can choose if you want to respond.

Never give credit card or bank account information over the phone to someone you do not know. Use the phone book or Internet to check the call-back number. Clever thieves give real sounding numbers to impersonate banks and government agencies.

How can I protect myself from contractor scams?

Always get estimates from three different contractors or handymen to learn about the work they will do and how much it could cost. Homeowners often are overcharged for the work, which is sometimes shoddy or never completed.

Be wary of slick business cards and contractor license numbers—these numbers can be stolen. Check with the Better Business Bureau and state contractor board listings before signing a contract for work.

Should I consider having the contractor finance my home repairs?

Be cautious of home improvement companies and contractors that offer to finance home repairs or improvements. These loans often include higher interest rates and fees. In many instances, homeowners may be overcharged, or the work may be shoddy or never completed.

Always check with the local Better Business Bureau and state licensing agency to see if the contractor is legitimate.

What are some foreclosure and loan modifications scams?

Common scams are phony counseling and bait and switch. With phony counseling or phantom help, the person on the phone offers to negotiate a deal with your loan servicer for a fee. You pay the fee up front, and you never hear from them again.

With bait and switch, you think you are signing documents for a new loan to make your mortgage current, but in reality you are signing away your home. The worst part is that you are left responsible to pay off a mortgage on a home you no longer own.

View this video from the U.S. Department of Treasury on how you can avoid foreclosure scams.

Consumer Cautions

When should I be on alert?

Marketing materials about home equity products may look like official government programs to gain your trust and confidence. This is false advertising and should be reported to your state department of real estate or financial services.

Some sales people will try to gain your trust with an abundance of charm and too much willingness to serve your needs. Make sure that you ask the right questions anyway.

How can I stop unwanted telemarketing calls?

To stop unwanted calls, sign up on the Do Not Call registry online or call toll-free 1-888-382-1222 from the telephone number you want to register. Registrations become effective within 31 days of signing up and are active for five years. Political organizations, surveyors, and charities are not subject to the law, but you can ask them to take you off their phone lists.

I applied for a mortgage with one lender, and now lots of lenders are contacting me – why?

Once a lender checks your credit report, a notation is made that you applied for a loan. Other lenders buy lists of people who have had recent credit inquiries so they can market their products to you.

You can opt out of receiving pre-screened offers by calling 1-888-5-OPTOUT (1-888-567-8688) or visiting opt out. You may also find the marketing a good way to compare various lenders.

How can I find out if an investment opportunity is legitimate?

Ask if the investment is registered with your state securities regulator or the U.S. Securities and Exchange Commission (SEC). Verify the answers on your own. There is no guarantee that a registered security will be a good investment. Although not all unregistered investments are frauds, the likelihood of fraud increases substantially with unregistered securities.

Also ask if the person selling the investment is registered with FINRA, your state securities regulator, or the SEC, and verify the answer. Visit the SEC’s website for more information on frauds and help for seniors.

How can I check on the background of specific brokers?

Go to FINRA BrokerCheck® to check on the background of specific individual brokers or brokerage firms.

How can I report loan modification scams?

If you or someone you know has been the victim of a loan modification scam, you can report it through the Loan Modification Scam Prevention Network. Use their online complaint form; report scams.

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