ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Tuesday, March 18, 1997 TAG: 9703180081
SECTION: NATIONAL/INTERNATIONAL PAGE: A2 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: ASSOCIATED PRESS
MEMO: a different version of this story ran in the New River edition.
``Consultants'' charge thousands of dollars to set up loans that HUD would do for free, officials say.
When the telephone solicitor told Maxine Wittig of Norwalk, Calif., that she could borrow money against the equity in her house, she was elated.
Wittig, a 69-year-old widow, had lent money to a friend and now needed some of her own. The solicitor arranged for a representative from America's Trust Inc., of San Juan Capistrano, Calif., to visit and explain how she could take out a ``reverse mortgage'' - a bank loan that could be repaid by Wittig if she ever sold her house or by her estate after her death. The deal sounded fine to her, and she signed to borrow $60,000.
But when the representative asked for the consulting fee of $5,571, she was stunned. Later, Wittig learned that the same service is provided at no cost by the Department of Housing and Urban Development.
She is hardly alone. With a growing number of elderly people paying for mortgage services that are offered elsewhere without charge, Housing Secretary Andrew Cuomo on Monday called marketing companies like America's Trust ``scam artists'' and announced that the department was taking steps to shut them down and to try to get the applicants' money back.
Referring to the Federal Housing Agency, a branch of the housing department that guarantees the reverse mortgages, he added that the companies ``will be eliminated from all FHA business.''
LENGTH: Short : 38 linesby CNB