Reverse mortgages are a popular option for senior citizens because they offer a cash source that can help them maintain their lifestyle into retirement. Unfortunately seniors have to be on the lookout for reverse mortgage scams and predatory lenders trying to take advantage of them.

Reverse mortgages are a special type of loan that allows home-owners over age 62 to borrow against the equity of their home without having to repay the money until they sell the home, permanently move out, or pass away. Only when the home is sold does the lender collect the amount borrowed plus interest.

Let's talk about some of the reverse mortgage scams that you need to be aware of if you or a loved one are considering this type of loan.

They may try to downplay the importance of the pre-loan counseling required by law. Almost all reverse mortgage programs require the borrower to go through counseling by an independent counselor specifically trained on the ins and outs of reverse mortgages. Shady lenders may encourage you to skip an in-person meeting in favor of a quick phone call. This may be an attempt to keep you in the dark about your options and the amount you are eligible to receive.

Another thing to watch out is for is brokers who want to bundle your reverse mortgage with other financial products. With a bundled transaction it's easy for a borrower to get confused as to the true cost. It's also easier for unscrupulous lenders to mask the high prices they are charging. Some scammers go so far as to tell borrowers they will not be eligible for a reverse mortgage unless they purchase another product or use the proceeds from the reverse mortgage to invest in another product controlled by the broker.

Even more blatant are the scammers who forge documents to get control of your money. Let's say you wanted to take out a reverse mortgage for $25,000, but when you go to sign the paperwork it says you are borrowing $250,000. The lender promises to change it but insists you sign the document first. A few weeks go by and you get a check for $250,000. When you call the lender they tell you its not a problem and all you have to do is wire them the extra $225,000. Unfortunately you later find out that the account belongs to the broker himself who then disappears with your money.