There are a significant number of occurrences of real estate fraud which negatively affect the elderly, caregivers and home owners who suffer with dementia. We at the NYC Chapter have been alerted to incidences of fraud which threaten the home ownership of people with dementia and their caregivers.

Elizabeth Renuart of the National Consumer Law Center wrote in Housing Policy Debate, a publication of The Fanny Mae Foundation, “An Overview of the Predatory Lending Process.”

She describes the frequency and incidence of Mortgage Fraud and cites examples of the elderly being approached by mortgage brokers with refinance offers that promise to provide cash, lower interest rates, and lower monthly payments and pay taxes. These refinance offers result in the opposite of any of the promises. Rather, the home owners end up with greater liability.

An 81 year-old African-American home owner was approached by a mortgage broker who offered a refinance package in which the owner would retire existing unsecured debt, lower her monthly payments, cover her real estate taxes and insurance, and lower her interest rates. Once the refinance contract was in effect, none of the promises were kept. Her unsecured debt was not retired, her monthly payments were not lowered, the refinance did nothing to cover her tax and insurance, and after a two year period, her interest rate increased significantly.

In another example, a 71 year-old widow received a phone call from a mortgage broker who offered to refinance her two mortgages, promising to lower her monthly mortgage payment and provide $5,000.00 in cash. The cash was inviting to her since she would be able to repair her kitchen. However, once the refinance was executed, she was liable for a payment that was 80% of her total monthly income and she received no cash from the transaction.

Each of the above is an example of predatory lending practices.

According to an article by J.H.Carr and L. Kolluri from the Fannie Mae Foundation, predatory lending is defined generally as having three features. These features used alone or in combination are:

1. Targeted marketing to a particular population based on race, ethnicity, age or gender or
   other personal characteristics that are not related to creditworthiness.
2. Unjustifiable loan terms.
3. Outright fraudulent behavior that maximizes the destructive financial impact on consumers,
   i.e. they are not truthful.

Financial concerns are paramount and families dealing with dementia are vulnerable to outside pressure from companies offering housing loan assistance. When a family is in a financial bind and is concerned about getting help, they may respond to loan offers from predatory lenders. This unfortunately leads to greater financial difficulty. The following are resources for prospective consumers to contact when they are considering refinancing their home mortgages:

U.S. Dept. of Housing and Urban Development
HUD approved housing counseling services, www.hud.gov.
These are sponsored housing counseling agencies throughout the country that provide information and advice on home buying, foreclosures, reverse mortgages and predatory lending.

Office of the NYS Attorney General
www.oag.state.ny.us – The Consumer Helpline @ 800-771-7755 or 212-416-8345
The Bureau of Consumer Frauds and Protections is a state agency that prosecutes businesses and individuals engaged in fraudulent, misleading, deceptive and illegal trade practices.

Neighborhood Economic Development Advocacy Project
www.nedap.org, 212-680-5100
A resource and advocacy center that works with community groups to promote financial justice in NYC’s low income communities and communities of color. NEDAP provides an outstanding resource called “Seniors: Know Your Financial Rights,” which covers issues such as basic banking to predatory lending.

—Rosemary Irving,
Manager, African-American Outreach
With generous contributions by Leslie Warren, DFTA

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