The world of personal finance abounds with wise words that often are ignored by people who should be wiser. "All that glitters is not gold." "If it sounds too good to be true, it probably is not true." "Pay attention to what they are not saying." "Be sure to read the fine print." "Let the buyer beware."
Seniors are frequently targeted for deals that can be costly, even by outright scams. Born in an earlier, simpler time, they often are too trusting. Back then, if a person was victimized, the seller was likely a local person who could face backlash from friends and neighbors. Now sellers are distant, disembodied entities that can only be punished by equally distant government agencies which may be more influenced by big system sellers than by voiceless elderly individuals. Seniors must be "wise as serpents" even if they are "harmless as doves."
The "reverse mortgage" deal is one that is proving to be too good to be true after the fine print is read. For several years now, various over-the-hill actors have appeared on television touting the merits of a transaction that offers money to seniors based on equity in their homes. The financial institution in effect is buying co-ownership of the home. Under a federal program, it is protected against loss but has no responsibility for ad valorem taxes, insurance, maintenance or repairs.
It is with these long-term expenses that problems arise. If seniors are financially vulnerable enough to turn to a reverse mortgage, they also may have trouble coming up with money to cover ongoing costs of home ownership. If they lose the house because of debt or decide to sell it to escape its burdens, they learn that the reverse mortgage institution is co-owner and has prior claim on proceeds up to the amount of the money it advanced. Any hope to use sale of the home to finance a stay in an assisted living facility or nursing home can evaporate. If it has been in the family for generations and has sentimental value for offspring, their only hope for continuity is to buy it when it comes up for sale. Of course, it is possible to get rid of the co-owner by repaying the amount advanced plus interest if the aged owner somehow recovers financially.
Home equity offers other ways to get financial help. There is always a straight second mortgage that might be manageable on normal income if the amount is not large. It is good strategy to confer with local banks or financial advisors as a first step.
'Tis the season. It is now autumn and the holiday season is upon us. Everything goes on sale. Scammers crawl out of the woodwork. "Charities" flood mailboxes, telephones and email boxes.
I am going to repeat some previously published advice. With some of the "big" fundraisers, only a small part of contributions reach the point of application. Organizational salaries and other expenses come first. Actual fundraising is contracted to specialists in the field. Mailing expenses, gifts and gimmicks to influence givers come out of the monies raised. No wonder sufferers from this or that get little help from contributions.
Please do not let this affect your generosity in the face of need. Inquire about the amount of "overhead expenses" involved in your favorite national charities or problem solving organizations. Local churches and other organizations receive money and dispense help to people who really need it. Recent hurricane disasters brought out the best in so many people. Administrative costs are low for United Way, which covers support for several local activities. You get to decide how your contributions will be used at Georgia Southern and Ogeechee Tech.
It is difficult to know how to protect yourself against scammers and identity theft masters. It is obvious that the federal government must become more involved in monitoring the cyber world and in discovering and preventing problems. Clearly, it needs to help itself and the citizens it serves. Yes, this means money — taxes, fees, etc. — but money is already being lost, along with our sense of security.
Businesses involved with internet activities that collect and use any aspect of personal information must be held accountable by heavy fines and threat of shutdown. Failure to protect those on whom they accumulate information for profit is inexcusable. If they cannot develop the technology for protecting information, they must not be allowed to gather it and use it.
Seniors are virtually helpless in the cyber world. They need and deserve protection.
Roger G. Branch Sr. is professor emeritus of sociology at Georgia Southern University and is a retired pastor.