'Reverse' mortgage scam targets elderly residents

Senior citizens over the age of 62 whose homes carry little or no mortgage debt may receive offers for a specialized loan called a reverse mortgage. Under these arrangements, eligible homeowners are promised an up-front cash payout with no obligation to repay the loan.

Even better, the sales pitch goes, seniors can live out the rest of their lives in their own homes - with no monthly mortgage - and have extra money to spend enjoying their retirement years.

So what's the catch?

Although seniors are generally not required to repay these loans, once they pass away or permanently leave their homes, that property essentially belongs to the lender.

Under a typical arrangement, the lender places a lien on the property in exchange for the cash it provides to the borrower. This allows the lender to recoup the loan, fees and interest, by selling the home after it is vacated.