In recent months, several news reports have highlighted scams targeting reverse mortgages, leading to increased inquiries about whether this product should be avoided altogether in Staten Island. It is important to distinguish between scams and reverse mortgages themselves. By understanding the product structure and following the established procedures, the risk of fraud can be significantly reduced. This article examines how reverse mortgages actually work in Staten Island and what items need to be checked.

A reverse mortgage is a product that allows homeowners aged 62 and older to receive funds from a lending institution by using their home equity as collateral. Unlike a traditional mortgage, borrowers receive funds in a lump sum, monthly payments, or a line of credit, rather than making monthly repayments. The principal and interest are settled when the home is sold, the owner passes away, or the home is no longer used as the primary residence. The most representative type is the HECM, which is the only reverse mortgage type insured by the federal government.

According to DeFalco Realty, as of June 2026, the median home sale price in Staten Island is around $750,000, which is a 0.6 percent increase from the previous year. Given that Staten Island has a high proportion of single-family homes among the five boroughs of New York City, long-term Korean families are likely to have built up significant equity. While this is advantageous, it is also important to note that having more equity does not necessarily reduce the application process or cost burden. Staten Island is often regarded as having neighborhoods with relatively stable school district reputations, but since school district boundaries frequently change, it is advisable to verify assigned schools directly before purchasing or applying.

To check in order, first, the applicant must be at least 62 years old, and the property must be their primary residence. If there is an existing mortgage balance, it must be at a level that can be paid off with the reverse mortgage funds, and the applicant must pass a financial assessment to confirm their ability to continue paying property taxes and insurance. Additionally, before applying, it is mandatory to undergo counseling from a HUD-approved counseling agency. Most of the scam cases reported in the news involve skipping this official procedure and pressuring individuals to act quickly, so any contact requesting a signature without counseling should be treated with suspicion.

In terms of costs, there are origination fees, an initial mortgage insurance premium of about 2 percent, an annual insurance premium of approximately 0.5 percent, and closing costs, making the initial costs higher than a traditional mortgage. The New York City property tax system must also be considered. For 1-3 family homes, the tax assessment rate for the 2025/26 fiscal year is 19.843 percent, and the assessed value is determined to be about 6 percent of the market value, resulting in an effective tax rate of about 1.19 percent compared to the actual market value. These property taxes and insurance premiums must continue to be paid even after receiving a reverse mortgage, and falling behind could lead to the risk of default.

The advantages include securing cash flow without monthly repayment burdens, and the non-recourse loan structure means that if the home value falls below the loan balance, heirs are not required to pay the excess due to FHA insurance. Conversely, as time goes on, the equity may decrease, potentially leaving less for heirs. In New York State, the population aged 65 and older makes up 18.9 percent of the total, which is higher than the national average, suggesting that such concerns will likely increase in Staten Island.

Ultimately, the most reliable way to avoid scams is to never skip HUD counseling under any circumstances. It is also important to consider that tax and mortgage conditions can vary by county and school district. This information is not investment or legal advice, and it is essential to consult with HUD and discuss thoroughly with family before making any decisions.