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The Great Real Estate Swindle All things related to the housing debacle including sub-prime lending practices, foreclosure fraud, MERS, REMICS and banking and political malfeasance.

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Old 10-16-2012, 09:53 AM   #1
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Default Reverse Mortgages Costing Some Seniors Their Homes

Some lenders are aggressively pitching loans to seniors who cannot afford the fees associated with them, not to mention the property taxes and maintenance. Others are wooing seniors with promises that the loans are free money that can be used to finance long-coveted cruises, without clearly explaining the risks. Some widows are facing eviction after they say they were pressured to keep their name off the deed without being told that they could be left facing foreclosure after their husbands died.

Linda McMahon
, now a 65-year-old widow, was ineligible to be on the reverse mortgage her husband took out in 2005, and lost her St. Croix Falls, Wis., home.

Joan Serioux-Forde, 72, thought that she couldn’t feel more devastated after her husband, Christopher, died last year. Then, roughly a month after the funeral, she received a letter from Generation Mortgage, a reverse mortgage lender, informing her that unless she paid $293,000, she would lose her home in San Bernardino, Calif. Ms. Forde said she was never informed that if she wasn’t on the reverse mortgage deed, she would have virtually no right to stay in her home unless she bought it outright. “It’s a nightmare,” she said. Generation Mortgage declined to comment.
....

http://www.nytimes.com/2012/10/15/bu...eir-homes.html
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Old 10-16-2012, 10:27 AM   #2
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I really have to wonder about the financial experience, and education, of the reverse mortgage borrowers that wind up in foreclosure. I don't know about the US, but in Canada it is typical to have both spouses on a mortgage, and HELOCs. Additionally, it is typical, in most cases possibly required, to have life insurance on the borrowers, sufficient to cover the balance of the mortgage. Often this insurance is acquired at the bank, upon signing the mortgage documents. Does this not happen in the US, as well? If so, why the hell would someone borrow against the home, with only one spouse on the docs, when part of the pitch for the product is that when you die, it's paid off through the sale of the home?

We currently have two mortgages, about to be three, and if DH has his way, four in the spring. We are both named on the mortgages and titles. The two existing would be paid out, upon the death of either of us, from insurance specific to the mortgage. The next two will be set up as well, in the same fashion.

Is it failure to plan, sheer financial ignorance, greed, or too cheap to pay insurance premiums? I know how life insurance works, that it becomes more expensive the older you become, and is likely very expensive in these situations, but why the hell would anyone take that risk? These people are like those that take a pile to Vegas, and whine about losing it all.
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Old 10-16-2012, 10:28 AM   #3
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Reverse mortgages are the worst scam ever allowed. They prey on old folks making them think its a good deal for their future. Nothing could be further from the truth. Once they've made their deal and sold their soul, the former owners of their homes get squeezed gradually tighter and tighter until their loans are way beyond the value of their homes. If they get sick or need to go into assisted living away from their homes (or as is in this case, die) then the vultures begin to circle. They themselves must live in the house, it cannot be rented out under the terms of the mortgage. They can't just quit claim their home to the mortgage company either. The company begins a long drawn out foreclosure process where they accrue more expenses while the home goes empty for months and months. At the end the house goes on the auction block to be sold for pennies on the dollar (the bidder is required to come up with a cash payment within 24 hours a fact that works well for investors). The remaining money due the mortgage company for the loan (now well beyond the original note) goes to collectors who pursue the original owner. Its shameful but perfectly legal. Ask me how I know this. My dad's reversed mortgage house just went on the auction block...
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Old 10-16-2012, 11:29 AM   #4
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It seems the laws governing reverse mortgages in Canada may differ significantly from those in the US. It's very disappointing that Obama's administration chose to do nothing about this. Obama could have incorporated laws similar to Canada's into His (do nothing) "Consumer Protection Act" . But not surprising considering all the big Wall Street banksters running his administration..
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Old 10-16-2012, 12:45 PM   #5
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What Blue Gecko said...heartbreaking to see people lose their homes like this.
You can blame whoever you want - greedy banks or uneducated borrowers - doesn't matter.
It's heartbreaking.
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Old 10-16-2012, 01:08 PM   #6
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Quote:
Originally Posted by Sonny View Post
Linda McMahon[/B], now a 65-year-old widow, was ineligible to be on the reverse mortgage her husband took out in 2005, and lost her St. Croix Falls, Wis., home.

Joan Serioux-Forde, 72, thought that she couldn’t feel more devastated after her husband, Christopher, died last year. Then, roughly a month after the funeral, she received a letter from Generation Mortgage, a reverse mortgage lender, informing her that unless she paid $293,000, she would lose her home in San Bernardino, Calif. Ms. Forde said she was never informed that if she wasn’t on the reverse mortgage deed, she would have virtually no right to stay in her home unless she bought it outright. “It’s a nightmare,” she said. Generation Mortgage declined to comment.

Quote:
Linda McMahon, a 65-year-old widow, watched helplessly as the locks were changed on her home in St. Croix Falls, Wis., last month. She said that in 2005, when her husband was 82 and she was 58, a mortgage broker from Wells Fargo promised her that she could add her name to the mortgage once she turned 62. That never happened because that year, in 2009, she didn’t have time to deal with it as her husband’s health quickly deteriorated and he died from a heart condition, she said.
So she wasn't old enough, didn't put herself on the mortgage, and wants to blame the lender?

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Ms. Forde said she was never informed that if she wasn’t on the reverse mortgage deed, she would have virtually no right to stay in her home unless she bought it outright.
If you are on the deed you have to be on the reverse mortgage or waive your rights. No one takes collateral with an unsecured owner.

My guess her husband owned the house and chose to make a reverse mortgage.

I feel sorry for these women but I don't see how the lender is at fault here.
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Old 10-16-2012, 01:32 PM   #7
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If you are on the deed you have to be on the reverse mortgage or waive your rights. No one takes collateral with an unsecured owner.
That's not true in every state, Pote.

When it came time to divide our property in my divorce, I was informed that shortly after we separated my ex-husband ran right out and slapped a second mortgage on our home, that was equal to the equity plus 20%. His name and mine were on the deed to the property, but his name ALONE was on the mortgage.

The ex did not violate any laws when he encumbered the property because his name was on the deed. Even though my name was also on the deed, and he encumbered my share of the equity, neither he nor the lending institution were under any legal obligation to inform me.

When the house was sold to settle our divorce, that mortgage was considered a "marital debt". One day I had $500k equity in a house, the next day I had nothing.
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Old 10-16-2012, 02:09 PM   #8
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The sad thing is the lenders may have asked the husbands about being married and the guys said, it's all in my name. That is how it works for us.

Did they understand their wife would have to move if they died first? Probably. But they want the women to have to move and not be alone, is my bet.

I can see my in-laws doing this. He would do it to push her to live with the kids. And I admit, I think she would be a mess living alone.
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Old 10-16-2012, 05:54 PM   #9
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The brokers get higher commissions if they keep the wife off the deed. What a racket.
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Old 10-16-2012, 06:21 PM   #10
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Hey! Maybe I'll get a reverse mortgage on my home!!! I don't owe a thin dime on it, so I could take out a reverse mortgage and go on a cruise and drink lots of soda pop and chew lots of gum and jump on the bed and eat all the sugar and make long distance phone calls... and and and...

Not the lenders fault, Pote? Jeeze, I guess they really have the borrowers best interests at heart when they take out a reverse mortgage for them, eh? Maybe a reverse mortgage is legal, but that doesn't make it right or moral or ethical. It's wrong, any way you look at it. For the most part, folks that decide on a reverse mortgage are getting on in years and may not be thinking just right. Gosh, it seems like a good deal. Why not? Do they read the fine print? Rarely. Do they understand it if they do? Evidently not if they go ahead and enter into a contract with these flimflam fly by night financiers. Do they enter into these reverse mortgage contracts expecting to lose money (the lenders)? Oh hell no! They are going to rape, pillage and burn down the house! They just have to be patient and wait for the ravages of time to wreak havoc on these poor unsuspecting people that fall for their hype. I'll quit now. This makes me tired. (notice the lack of smileys - this pisses me off)
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Old 10-16-2012, 06:35 PM   #11
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Reverse mortgages are nothing new. Several years back they marketed them as a way for seniors to 'benefit' from the massive equity just 'waiting' to be tapped in the home they'd had for all those years.

Then there was a slight lull as property values began falling.

This past year or so what I've noticed is they're focusing on using a reverse mortgage for 'enjoying you golden years', taking care of medical bills, etc. And they're using paid spokesmen such as Henry Winkler.

I mean come on, who of a certain age doesn't remember the Fonz and Happy Days .... A warm, comfortable 'known' individual.

Bottom line is that these situations do, IMO, prey upon a select group / target market, who may be especially vulnerable due to several factors. Lack of financial knowledge, being overwhelmed with medical bills, having health issues that might required care not covered by their health insurance, lack of family to either help them navigate the process of simply be there to help them with their day to day issues.

Add in to that mess, is that many individuals, not just older adults, don't want to let people know if they've been taken advantage of.
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Old 10-16-2012, 08:14 PM   #12
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The really pitiful thing about my dad's reverse mortgage is that his investment broker recommended it. Guess who got to day trade his new found money? Dad got 60k that became a debt of 100k in 8 years. He has no other income besides Social Security and that's not much. I know there are a lot of seniors in this same boat and the people who prey on them are relentless: How about a new roof, new windows, new garage door, new security system, gutters, lawn edging, it goes on and on. They are targeted because they are easy victims. They love having someone to talk to and it doesn't take long to become trusting (what a bunch of crooks). Next thing you know they've signed a contract and the debt starts to build. Its the saddest thing I've ever experienced.
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Old 10-16-2012, 08:32 PM   #13
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Down here in 'Gods waiting room', it's way too common, IMO.

Large scale scams (IMO) such as reverse mortgages and 'petty' scams that are just individuals scamming on those they think are weak and easily exploited.

You're right: They prey upon the lonely, the fearful and the frightened.
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Old 10-16-2012, 08:36 PM   #14
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NV....you live in FL?
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Old 10-16-2012, 08:55 PM   #15
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Quote:
Originally Posted by MaxTheKnife View Post
Not the lenders fault, Pote? Jeeze, I guess they really have the borrowers best interests at heart when they take out a reverse mortgage for them, eh? Maybe a reverse mortgage is legal, but that doesn't make it right or moral or ethical. It's wrong, any way you look at it. For the most part, folks that decide on a reverse mortgage are getting on in years and may not be thinking just right. Gosh, it seems like a good deal. Why not? Do they read the fine print? Rarely. Do they understand it if they do? Evidently not if they go ahead and enter into a contract with these flimflam fly by night financiers. Do they enter into these reverse mortgage contracts expecting to lose money (the lenders)? Oh hell no! They are going to rape, pillage and burn down the house! They just have to be patient and wait for the ravages of time to wreak havoc on these poor unsuspecting people that fall for their hype. I'll quit now. This makes me tired. (notice the lack of smileys - this pisses me off)
Of course, not. I didn't say.

Are we Communists? The goal of a company is to increase shareholder equity, hence profits.

If there is fraud, then there will be investigations and fraudsters will go to jail.

If there is no fraud and people sign the mortgage then where is the crime?

First people complained there wasn't enough disclosure.

Then when that was changes then it was in the "fine print".

Then, more laws and some of the words are highlighted. Now you get an over view sheet.

Now there is too much paper according to the complainants.

They want it not to be written down and be interpreted their way and they want that interpretation to be able to change based on their ciscumstances.

They want it both ways.
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Last edited by Potemkin; 10-16-2012 at 09:10 PM. Reason: Edited. Too strong lending an incorrect impression.
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Old 10-16-2012, 09:13 PM   #16
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You make some valid points, Pote.

But I think (correct me if I'm wrong) but a large portion of the issue / problem with 'reverse mortgages' is that they specifically target a very well defined demographic. One which can sometimes be described as vulnerable.

Not all persons who cannot understand the pages and pages of documentation involved in a reverse mortgage is either incompetent or incapacitated to the degree of needing a guardianship / conservatorship (depending on the state). Which that opens a whole 'nother can of worms and IMO, is a business in and of itself and has its own agenda (IMO).

Perhaps you're comfortable with the terms and language commonly used in these type of contracts; but not everyone is. Also reverse mortgages are basically a sales situation. They're selling a product and as such their income is often based on their level of sales.

And sometimes in this world, to make a sale, a person might be less than forth coming, will say things they think the buyer, will buy.
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Old 10-17-2012, 10:28 AM   #17
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That's exactly the point NV. I've talked to the state department about how this has been handled and spoken to 2 different lawyers during the process. The mortgage company is within the law but everyone I've spoken to admits they slink right on the fine line between good and evil. They are quite versed on this process. I'd love to see the numbers pertaining to foreclosures and the elderly by these companies. The domino effect on peoples lives can only be speculated on. The elderly lose their homes then their savings and investments so at the very point where they need assistance the most, they have nothing. They don't qualify for Medicaid because they haven't been poor long enough (Medicaid goes back 5 years). They end up losing everything and their families (if they are lucky enough to have ones that care) have to pick up the slack. That's no easy task these days in this economy.
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Old 10-17-2012, 11:19 AM   #18
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They end up losing everything and their families (if they are lucky enough to have ones that care) have to pick up the slack. That's no easy task these days in this economy.
I wouldn't half mind caring for elderly and disabled relatives if the judicial system protected their assets from theft. If a Traveler knocks at Grandpa's door and sells him a grossly overpriced roof made with shoddy materials that they never finish - Grandpa has a case. But if a child steals their parents assets, or a bank does a hard sell for a reverse mortgage, or a nursing home demands all their assets be signed over to them - the courts shrug it off. I am furious over the attitude of some judges and lawyers I have met. The elderly and disabled are dependent on the care of the State - so why do they need money? It doesn't seem to matter one bit that the money was STOLEN from them, or they were TRICKED out of it by lies and false promises.

When they have NOTHING, and turn to loving relatives for help... well, if you want to help them that's up to you. Don't complain if you take on that burden.
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Old 10-17-2012, 11:37 AM   #19
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How many of these same vulnerable elderly were the savvy business people of years ago?

They are not going to admit they lost the savvy until it's too late. It's near impossible to get some to tell anyone-friends or family-what is going on.

I don't think you can have the 'don't tell' family relationship and then figure when your parents get old, you can do anything to help them.

As many as are 'screwed' by a reverse mortgage, there are many more who it works out just great and gives them more years on their own.

I told someone recently that most people, if they live long enough, will end up on Medicare AND Medicaid. If you have some awesome years in there living off the equity of your home-by selling or by reverse mortgage, good for you!
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Old 10-17-2012, 02:50 PM   #20
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Quote:
Originally Posted by NowVoyager View Post
You make some valid points, Pote.

But I think (correct me if I'm wrong) but a large portion of the issue / problem with 'reverse mortgages' is that they specifically target a very well defined demographic. One which can sometimes be described as vulnerable.

Not all persons who cannot understand the pages and pages of documentation involved in a reverse mortgage is either incompetent or incapacitated to the degree of needing a guardianship / conservatorship (depending on the state). Which that opens a whole 'nother can of worms and IMO, is a business in and of itself and has its own agenda (IMO).

Perhaps you're comfortable with the terms and language commonly used in these type of contracts; but not everyone is.
I am comfortable with these about the level of an average person. Well, maybe a little more with the help of Ms. Pote.

There are some complex contracts and investments which I stay away from because I cannot understand them. Short sale of stocks, derivatives, swaps, etc.

I have a couple of rules.
  1. Stay away from complex contracts and investments
  2. Tell people who want to pressure to fark off.
  3. Don't be greedy. "Too good to be true" is true. You aren't special, you aren't the only one to "find" this deal,
  4. There are attorneys in your price range if you look hard enough
  5. Never decide in a rush
  6. Never love a deal or contract or investment. Be willing to walk away.

#3 is the most important looking back on this.


Quote:
Also reverse mortgages are basically a sales situation. They're selling a product and as such their income is often based on their level of sales.

And sometimes in this world, to make a sale, a person might be less than forth coming, will say things they think the buyer, will buy.
Are you suggesting that the lender of the reverse mortgage give away their product?

How is this any different than any other sales situation? Home, car, groceries, gas, milk.
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Old 10-17-2012, 03:15 PM   #21
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I am comfortable with these about the level of an average person. Well, maybe a little more with the help of Ms. Pote.

You're lucky then, Pote, to have someone you can trust and who is well versed in such things. That's not the case for everyone. And that shouldn't be a reason or justification for others to take advantage of them.


There are some complex contracts and investments which I stay away from because I cannot understand them. Short sale of stocks, derivatives, swaps, etc.



I have a couple of rules.
  1. Stay away from complex contracts and investments
  2. Tell people who want to pressure to fark off.
  3. Don't be greedy. "Too good to be true" is true. You aren't special, you aren't the only one to "find" this deal,
  4. There are attorneys in your price range if you look hard enough
  5. Never decide in a rush
  6. Never love a deal or contract or investment. Be willing to walk away.

#3 is the most important looking back on this.




Are you suggesting that the lender of the reverse mortgage give away their product?

You really do tend to try to change a situation to make it seem that I or others are trying to attack a person / institute from making money.

Reverse mortgages start with a 'warm fuzzy' generic sales pitch which is designed to loosen up the perspective client / customer. In that process the salesperson is trying to glean all they can about that person. Not just their financial situation, but directly and indirectly, what they can use to close the deal.

"So, Mr. So&So ...... Is that a picture of your grandson?"

Something as seemingly as pleasant and genuine as that is often a great entry into finding out that Mr. So&So, misses his daughter and fer family but they live on the other side of the country. And since his wife died, he just isn't comfortable traveling alone.

Now the sale agent has enough information to know how best to make the sale, what sort of things will make Mr So&So trust them (such a nice young man - real concerned about me) and then use that to go in for the sale.

Predatory.

Legal? Yes.

Ethical? No.

Honest? Not in my book. But 'honest enough' to skirt the law, exploit a vulnerable person, make that sale and get that commission check.






How is this any different than any other sales situation? Home, car, groceries, gas, milk.
Just a side note Pote.

I hope that neither you, Mrs Pote nor anyone you care about is ever in a position to be vulnerable to the many questionable practices and individuals who know how to legally exploited others.
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Old 10-17-2012, 04:35 PM   #22
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Do you all think it's better to make the seniors sell their home, rather than allow reverse mortgages?
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Old 10-17-2012, 11:28 PM   #23
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Just a side note Pote.

I hope that neither you, Mrs Pote nor anyone you care about is ever in a position to be vulnerable to the many questionable practices and individuals who know how to legally exploited others.
I think the difference is that if you read my thread above you will see that I acknowledge that there are fraudsters, even mortgage fraudster along with the honest companies that provide the ability for people to buy homes.

You, and others, seem to think they fraudsters and "predatory" and people that make a poor financial decision and get a mortgage are victims of predatory practices and should be allowed "do overs" if it goes against them.

Anyone can become a victim of fraud, however if you follow the rules I outlines above, which you didn't quote, the chances become almost nonexistent.
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Old 10-18-2012, 08:26 AM   #24
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Anyone can become a victim of fraud, however if you follow the rules I outlines above, which you didn't quote, the chances become almost nonexistent.
That's ridiculous.

Yes, break your rules and it is very possible you will get hurt. But you seem to assume that people have to take some action to lose their assets, or if a loss occurs without their knowledge and approval they'll have legal recourse to obtain a full recovery.

That is a very comforting thought but it is not true in the real world.

EVERYTHING you own can be taken away from you without any action or guilt on your part and without any legal recourse for recovery. There are plenty of companies and con men who spend their lives trying to transfer your wealth to their pockets. They know far more than you do, and have much better connections.
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Old 10-18-2012, 09:48 AM   #25
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Originally Posted by potemkin
I think the difference is that if you read my thread above you will see that I acknowledge that there are fraudsters, even mortgage fraudster along with the honest companies that provide the ability for people to buy homes.

You, and others, seem to think they fraudsters and "predatory" and people that make a poor financial decision and get a mortgage are victims of predatory practices and should be allowed "do overs" if it goes against them.

Anyone can become a victim of fraud, however if you follow the rules I outlines above, which you didn't quote, the chances become almost nonexistent.
Quote:
Originally Posted by flourbug View Post
That's ridiculous.

Yes, break your rules and it is very possible you will get hurt. But you seem to assume that people have to take some action to lose their assets, or if a loss occurs without their knowledge and approval they'll have legal recourse to obtain a full recovery.

That is a very comforting thought but it is not true in the real world.

EVERYTHING you own can be taken away from you without any action or guilt on your part and without any legal recourse for recovery. There are plenty of companies and con men who spend their lives trying to transfer your wealth to their pockets. They know far more than you do, and have much better connections.
One can only assume the rest of my quote, and other postings on this thread, were not visible to you which caused you to attribute things to me which I did not say
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