By: Evor Vattuone | November 5, 2009 | Bad Products & Services, Illegal Schemes & Scams
Using reverse mortgages to fund annuity premium payments has become an increasingly used scam by unscrupulous loan officers and annuity salespeople. Usually a reverse mortgage is for seniors who need the money for living expenses, not deferred annuity payments.
But, with the attraction of hefty commissions on annuity sales, there are a growing number of reverse mortgage lenders who seek to open annuities funded from reverse mortgage payments. The usual prey are naturally seniors who are easily befuddled by complex terms and who also have a high level of trust for their mortgage consultants and/or annuity salesperson – who all too frequently call themselves financial advisors.
Currently, there’s a warning out by the National Association of Insurance Commissioners to stop this practice. While not strictly illegal, it’s highly unethical and almost always bad for the customer.
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