As reports of fraud surrounding reverse mortgages continue, inquiries in Cleveland are gradually changing. While questions about the product structure were common in the past, there has been an increase in inquiries about what signs to look for to suspect fraud. Observing the recent market, this shift is not necessarily negative. However, there are cases where the effort to avoid fraud leads to misunderstandings about the product itself, so this article will outline the key items to check based on Cleveland.

A reverse mortgage is a product that allows homeowners aged 62 and older to receive funds from a lender by using their home equity as collateral. Unlike a traditional mortgage that requires monthly payments, funds can be received in a lump sum, monthly payments, or as a line of credit, with the principal and interest being settled when the home is sold, the owner passes away, or the home is no longer used as the primary residence. The Home Equity Conversion Mortgage (HECM), which is guaranteed by the Federal Housing Administration, is the most common type of reverse mortgage and the only type guaranteed by the federal government.

According to Zillow data, the average home value in Cleveland as of May 31, 2026, is $120,549, which is a 2.3 percent decrease over the past year. Another research firm, Redfin, reports the median sale price during the same period to be around $142,000, showing some discrepancies. While the figures may vary depending on the methodology, Cleveland is considered a relatively low-priced major city within Ohio. A lower home price means that the available equity may also be limited, suggesting that the funds accessible through a reverse mortgage could be less than in other major cities. This may not be an issue for families who have lived in their homes for a long time and have paid off most of their principal, but for families who have moved in recent years, the available equity may not be as substantial as expected, so it is advisable to check the approximate equity size beforehand.

To outline the items to check in order, the first is the eligibility requirements. You must be at least 62 years old, meet the primary residence requirement, be able to repay any existing mortgage balance, and pass a financial assessment to confirm your ability to pay property taxes and insurance. The second is the counseling process. HECM requires mandatory counseling from a HUD-approved counseling agency before applying. The third is verifying the other party. Be cautious of contacts that impersonate government agencies or banks, urging you to hurry or skip the counseling process, as these are likely scams.

In terms of costs, there are origination fees, an initial mortgage insurance premium of about 2 percent, an annual insurance premium of around 0.5 percent, and closing costs, making the initial costs higher than a traditional mortgage. Property taxes must also be continuously monitored. According to Ownwell data, Cuyahoga County has the highest effective tax rate in Ohio at about 2.55 percent, and the median effective tax rate in downtown Cleveland is also around 2.29 percent. After receiving a reverse mortgage, you will still be responsible for these property taxes and insurance premiums, and falling behind could lead to a risk of default.

The advantages include the ability to create 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 guarantees. Conversely, the decreasing equity over time may reduce the assets left for children, which can be a concern. In Ohio, the population aged 65 and older makes up 19.1 percent of the total, which is higher than the national average, and this demand for counseling is expected to continue in Cleveland.

Ultimately, the most reliable way to avoid fraud is to not skip the official process, specifically the HUD counseling. It is also important to consider that tax and mortgage conditions can vary significantly by community even within the same county. This information is not investment or legal advice, and it is recommended to thoroughly consult with HUD counseling and family before making any decisions.