Contractors, handymen, loan brokers, even family can scam older homeowners. What to know

By LEW SICHELMAN Andrews McMeel Syndication

Every few years, federal regulators issue warnings to banks and credit unions about the dangers of senior financial abuse. But it isn’t just up to financial institutions to spot instances of potential fraud. It’s also up to anyone with a family member or friend who’s getting up in years — especially if they own their home.

 Older homeowners are a prime target for swindlers, and it’s easy to see why. Not only are seniors viewed as vulnerable and trusting, but homeowners 62 and older are sitting atop roughly $14 trillion of housing wealth.

Unfortunately, an AARP report says that older adults lose around $28.3 billion annually to some form of financial exploitation. And the Financial Crimes Enforcement Network, part of the U.S. Treasury Department, says banking institutions filed more than 155,000 elder financial victimization reports in the 12-month period ending in June 2023. 

These reports don’t break out figures related solely to the housing sector. But financial exploitation can take many forms, as do those who prey on unsuspecting seniors. Sometimes, for example, rogue loan officers or real estate agents persuade an elderly homeowner to sign false loan documents and keep the proceeds for themselves. Sometimes, they even take over the senior’s house. 

More often, though, the culprit is a family member. Verified cases by the New York State Office of Children and Family Services found that two-thirds of elderly fraud perpetrators were family members. Sons are most likely to rip off a parent or grandparent, according to a MetLife study. But fake paramours, fly-by-night contractors, bogus handymen and shady housing professionals are guilty, too.

Most mortgage lenders, real estate professionals and contractors act lawfully. But some don’t. In one instance, a loan broker persuaded a widow with dementia to take out a reverse mortgage on her house. In another case, a tax preparer took total control of all the assets of a 65-year-old client.

In yet another, a popular hairstylist persuaded three women to let him manage their real estate investments. When one died, it was discovered that he had depleted her bank and investment accounts, and her home now belonged to him. 

The message here is clear: If there is an elder in your life who is considering a reverse mortgage, home equity loan or some other type of financing, or is even just hiring someone to remodel a kitchen or bath, gently talk to them about their plans. Make sure it makes financial sense. 

This, of course, assumes your senior is willing to discuss their financial situation; many keep that information private for fear of losing their independence. But if you can get them to open up, talk about the pros and cons of their plans together. In situations involving reverse mortgages, in which borrowers extract equity from their properties, federal rules mandate that borrowers meet with an independent housing counselor for a full explanation of what is involved. But there are no such protections for other types of loans or for dealing with contractors.

Consequently, you should make sure your senior knows exactly what they are getting into. 

Here are a few questions to ask to make sure they aren’t being exploited: 

▪ Find out who is really going to benefit: the senior, or someone else. Red flags include caregivers who isolate elders from their family and friends, new “best friends,” missing belongings, and bank and investment statements that are no longer being received by the senior. In one case, a woman established a joint checking account to help another woman she’d befriended in a senior computer class pay her bills. Only after one of her checks bounced did she discover most of her money was gone. In another instance, a caregiver in a group home diverted the Social Security checks originally sent to more than 30 residents to her own home.

▪ Try to determine if the senior is being coerced, and if so, by whom. Be particularly aware of in-home helpers, including personal care attendants and meal service providers, who have access to the senior’s financial papers and identifying information. Pay special attention to those hired directly from newspaper ads or referral services that are not screened by a local government agency. In one case, a caregiver hired by an 84-year-old bedridden senior forged the senior’s signature to create a false power of attorney. The caregiver then proceeded to put his name on the senior’s accounts and replace the senior’s home address with his own. Luckily, the senior took action when he realized he was no longer receiving monthly bank statements. 

▪ Determine if the senior’s needs can be solved in another way. For example, there are several alternatives to a reverse mortgage, and there may be other choices besides a second mortgage to pay for a needed remodeling project. If this is beyond your area of expertise, consider calling in a trusted or recommended professional for advice.

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Contractors, handymen, loan brokers, even family can scam older homeowners. What to know