Fake HUD Counselors & Servicer Impersonation: Warning Signs for HECM Heirs
Scammers specifically target heirs of reverse mortgage borrowers because: the heir is grieving and overwhelmed; the 6-month deadline creates urgency that scammers exploit; the HECM system is complex and heirs often don't know what legitimate servicer contact looks like; and large sums of money are involved. The two most common impersonation scams are (1) fake HUD counselors who charge fees for services that are free by law, and (2) fake 'servicer representatives' who collect payments that never reach the actual lender.
HUD Counseling Is FREE — Anyone Who Charges Is a Fraud
Federal law requires that HUD-approved HECM counseling be available to borrowers and heirs at no cost beyond a nominal administrative fee (which may be waived for low-income clients). Any person or company that charges a substantial fee for HECM counseling or 'HUD assistance' is operating a scam.
The Law on HECM Counseling Fees
24 C.F.R. § 206.41: HECM counselors must be independent of lenders and servicers; counseling must be provided to borrowers, Non-Borrowing Spouses, and heirs.
24 C.F.R. § 214.313: HUD-approved housing counseling agencies may charge reasonable fees, but fees may be waived for low- or moderate-income clients who cannot afford them.
The typical cost of legitimate HUD HECM counseling: $0 to $125 (nominal administrative fee). Anyone charging $200+ for 'HUD counseling' is almost certainly operating a scam.
Verify any 'HUD counselor' at: hud.gov/program_offices/housing/sfh/hcc/hcs.cfm — searchable national database of HUD-approved counseling agencies.
| ContentWhat It MeansContentWhat to Do** | | --- | --- | --- | | 'HUD Counselor' charges $500+ for services | Not a legitimate HUD-approved counselor — HUD counseling costs $0–$125 maximum | Refuse; hang up; report to HUD at (800) 225-5342 | | Solicits you by phone/email with 'urgent' HECM deadline message | HUD and legitimate servicers do NOT cold-call heirs to offer help — you contact them | Do not respond; contact servicer directly using number from official documents | | Claims to be from 'HUD' and asks for payment | HUD does not directly call heirs; HUD does not charge heirs fees; HUD's contact is through approved agencies | Hang up; call HUD directly: (800) 225-5342 to verify | | 'Certified HECM Specialist' title without verifiable HUD certification | 'Certified HECM Specialist' is not a protected HUD title — check actual HUD counselor registry | Verify at hud.gov counselor lookup before sharing any information | | Requests payment to 'extend your deadline' | Extension requests are made directly to the servicer at no charge — no third party can extend your deadline | Do not pay; contact servicer directly |
Servicer Impersonation Scams
Servicer impersonation is more sophisticated: the scammer has your HECM loan number, the servicer's name, and sometimes details about your parent's account obtained through public records or data breaches. They call or email posing as the servicer's loss mitigation department.
How to Verify You Are Talking to the Real Servicer
- Hang up or close the email. Do NOT provide any information.
- Find the real servicer contact number from: (a) the original HECM Note or Deed of Trust documents, (b) the HUD eCases database at hudnspire.com, (c) the NMLSR registry at nmlsconsumeraccess.org, or (d) the servicer's official website found independently via Google search.
- Call the number YOU found — not the number the caller left.
- Verify the loan with a real representative using the borrower's name, address, and loan number only — do not provide Social Security numbers, bank account numbers, or payment information over the phone until identity is verified.
- Always request WRITTEN confirmation of any payment instructions — legitimate servicers will provide a payoff statement with wiring instructions on official letterhead; these can be cross-referenced with the servicer's official website.
Wire fraud via fake servicer payoff instructions is extremely common. Before wiring any money to 'pay off' a HECM, call the servicer's main number (found independently) and verbally confirm the exact wire transfer details — including routing number, account number, and reference code. One wrong wire transfer can result in total loss of funds with no recovery.
Reporting Fake HUD Counselors and Servicer Impersonators
How to Report Fraud
HUD FHA Resource Center: (800) CALL-FHA or (800) 225-5342 — report fake HUD counselors and fraudulent claims of HUD affiliation.
CFPB Consumer Complaint Portal: consumerfinance.gov/complaint — report servicer impersonation and payment fraud involving mortgage servicers.
FBI Internet Crime Complaint Center (IC3): ic3.gov — report wire fraud and internet-based impersonation scams.
Federal Trade Commission: reportfraud.ftc.gov — report consumer fraud including fake government agency impersonation.
Your state Attorney General Consumer Protection Division — all states have fraud reporting mechanisms.
State Department of Financial Institutions — file complaint against any entity claiming to be a licensed mortgage servicer.