Paying off a home mortgage loan can take up a big chunk of your life and finances. A reverse mortgage loan turns the tables — you actually get money back from your loan provider to use however you choose. All those years of monthly payments have created equity and a source of income.

Fannie Mae, the major secondary loan provider, predicts that up to a million senior citizens may take advantage of reverse mortgages over the next five years. But that increased activity raises the potential for unscrupulous or illegal practices. Fannie Mae has warned seniors to watch out for dishonest reverse-mortgage deals.

“As homeowners reach the golden years of debt-free home ownership, they can use their homes to obtain loans at favorable terms,” says Richard Roll, president of the American Homeowners Association. “You can take the loan proceeds of a reverse mortgage in the form of monthly income, as a lump sum, as a line of credit, or a combination of the above. It pays to shop around with different loan providers to see how much cash is available on your home for the most favorable terms. And seniors need to beware of pressure-sales tactics.”

Fannie Mae says to watch out for telltale signs of fraud. First, know how to recognize pressure sales tactics — don't let anyone fast-talk you into a reverse mortgage, not even friends or relatives. Second, make sure that payments are made out directly to you — don't sign the money over to anyone else. Third, remember that it's totally up to you how you spend the money — just because you heard about a reverse mortgage program from a remodeling company or an investment firm doesn't mean you have to purchase their services.

Fannie Mae's free brochure on reverse mortgages is available by calling (800)732-6643.

For information, go to http://www.ahahome.com, the web site for American Homeowners Association.

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