A Grim Fairytale of Elder Abuse: The Straw Buyer and Reverse Mortgage Scam

by Robin Slade

Elder hand on wheelchair

Once upon a time a con named Don wanted to purchase a foreclosed, depressed property but was unable to obtain a mortgage.  Don enlisted the help of a greedy son-of-a-b*&^% named Mitch to act as a “straw buyer.”  They were able to secure a loan because Mitch fraudulently led the bank to believe the property would be used as his primary residence.

To further their scheme, Don and Mitch found a vulnerable elder, Elmer, and transferred the deed to him. Elmer, believing he was the benefactor of a wonderful act of kindness, was allowed to live in the house rent-free.  Elmer had no idea Don & Mitch were up to no good.

After 60 days, Don & Mitch initiated a Home Equity Conversion Mortgage (HECM) also known as a “reverse mortgage” in Elmer’s name with the assistance of a falsely inflated appraisal “sold” by Hazel, a crooked mortgage appraiser.

Don & Mitch told Elmer to request a “lump sum disbursement of the equity” from the reverse mortgage in order to receive cash back.  However, Don & Mitch arranged to receive the loan proceeds and then POOF, they disappear.  One year later, Elmer, unable to pay his property taxes is forced to vacate the property.  He was left homeless and unable to understand how he became a fraud pawn and a victim of elder abuse.

There are many immorals to this story – the individuals able and willing to use vulnerable seniors as instruments to their crime and the unethical so-called “professionals” driven by greed. Last year, and in defense of these seniors, Congress and President Obama approved the Elder Justice Act as part of the new US health care system plan. The Elder Justice Act coordinates efforts to prevent elder abuse on a national level, but it remains powerless as it is still, a year later, unfunded by Congress.

Contact your representatives in Congress and ask them to support funding for the Elder Justice Act!  You can find out how to contact your Representative, through Congress.org.

For more information on how to spot suspicious activity associated with the financial abuse of the elderly, and who to contact if you suspect a senior may be the victim of a scam, please read Protecting Our Seniors: Watching out for Elder Abuse.