A lawsuit accusing Prudential Insurance Co. of America of improperly collecting interest on unpaid veterans’ life-insurance benefits was expanded to include claims of fraud.

The plaintiffs, seeking to have the case certified as a class action, or group, lawsuit, on behalf of 60,000 beneficiaries of military life insurance policies, filed an amended complaint yesterday adding the fraud claims and additional claimants. The case was originally filed July 29 in federal court in Springfield, Massachusetts.

The suit claims Prudential fails to pay beneficiaries in a lump sum as required by U.S. law and the language of the policies, instead encouraging them to leave the money in accounts with the company, which pays them a small amount of interest.

Prudential is believed to have made “half a billion dollars or more,” the amended complaint said.

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Mortgages come in various types.  If you want to know what is best for you, then you have to understand the basic facts about different mortgages.  This way, you will understand their benefits and disadvantages.

The Basics of Mortgages

So, what really is a mortgage?  This is a type of loan that you that you have to repay over an agreed time frame.  Normally, a mortgage is secured by a property such as your home.  If you have a mortgage, you are securing a promise that the amount you borrowed from the lender will be repaid in full.   For the majority of consumers, getting a mortgage is one of the biggest and most serious financial decisions that they have to make.

There are many lenders that can offer mortgage loans.  Banks, for example, are the number one originators of mortgages.  You can also get a mortgage from special mortgage lenders, building societies, or you can seek the intervention of a mortgage broker.  You can get a mortgage after finding the crucial information you need.  It is also possible to get the advice of a financial advisor who will give you recommendations on what type of mortgage would be best for your situation.

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Homeowners over age 62 who are having a hard time paying monthly bills may rely on reverse mortgages to stay in their homes. NY1′s Money Matters reporter Tara Lynn Wagner filed the following report.

Homeowners who have spent years paying for their houses may have their houses pay for them. That is the idea behind a reverse mortgage which enables struggling seniors to get equity out of their home in one lump sum, regular monthly payments or a revolving line of credit.

While the homeowner needs to demonstrate a level of need, Jason Levy, the chief executive officer of Guardian First Funding, says a reverse mortgage is not a sign of failure.

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Intent is to make information more fully available for home-loan applicants

The Federal Reserve on Monday issued a package of rules and proposals for mortgages, including a measure that would require lenders to disclose to borrowers how their mortgage payments can change over time.

The provision, which is an interim rule that would take effect on Jan. 30, 2011, seeks to make sure borrowers are alerted to the risks of payment increases before they take out mortgage loans with variable rates or payments, such as adjustable rate mortgages.

Based on the measure, lenders would need to provide details to borrowers about what the maximum interest rate and payment they would need to make during the first five years of their adjustable-rate mortgage, as well as a “worst case” example showing what the maximum rate and payment they could be required to pay.

Lenders also would need to explain to borrowers that they can’t avoid hikes in payments by refinancing their loans, according to the provision.

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Two men have been charged in an alleged $200 million real-estate fraud that targeted Orthodox Jews in four states and overseas.

Eliyahu Weinstein, who represented himself as a real-estate investor based in New Jersey, allegedly exploited the social and business customs of the Orthodox Jewish community to carry out the scheme, according to a criminal complaint made public Thursday. The scam allegedly began in September 2005.

Weinstein and Vladimir Siforov, of New York, have been charged with fraud in the matter. They’re expected to appear in federal court in Newark later Thursday.

Some of his victims’ money was used by Weinstein to amass a substantial collection of art, jewelry and Judaica, prosecutors from the U.S. Attorney’s office in Newark alleged in the criminal complaint. The collection includes manuscripts and antique Judaica items worth about $6.2 million; a jewelry and clock collection that Weinstein allegedly spent $7.6 million to acquire; jewelry and watches valued at $6.2 million, including items from Bulgari, Cartier, Omega and Harry Winston, according to the complaint.

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Question: I’m behind in saving for retirement. Should I take more risk to catch up? –James Wilson, San Antonio

Answer: I can understand your concern — and the temptation to try to ramp up your nest egg by investing more aggressively in stocks. After all, in the wake of an abysmal 10-year span in the market, a return to equities’ historical annual gains of 10% may seem like a good bet.

Yet there’s no assurance that a subpar decade will be followed by a superior one. If anything, economists’ expectations of generally slow growth over the next few years suggest it may take a while for stocks to return to their glory days.

Besides, recent research shows that the market is actually more prone to gut-wrenching setbacks than many investors assume.

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Insurance companies contracting with the Department of Veterans Affairs (VA) to provide life insurance to soldiers have been profiting off monies intended for survivors of those killed in Afghanistan or Iraq.

Instead of paying lump sums to beneficiaries of troops killed, companies like Prudential and MetLife provide them with “checkbooks,” giving parents and relatives the impression that the life insurance money has been put into a bank account for them to draw on whenever they like. In reality, the money sits in general corporate accounts earning Prudential 4.8%, while the beneficiaries receive maybe 1%.

In reality, survivors have the right to take all the money and then put it in money-market accounts that earn a higher rate of interest.

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What is a reverse mortgage?

It’s a home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their main residence.

Age matters (income doesn’t)

If you are 62 or older and have paid off your mortgage (or owe only a small balance), you may be able to tap your home equity to generate extra cash. You can take the money as a lump sum, a line of credit, monthly payments or a combination of a credit line and regular payouts. Unlike a traditional mortgage or home equity loan, you don’t need to meet income or credit requirements to qualify, and you don’t have to repay the loan as long as you live in the house.

Lenders are motivated

Declining property values and stricter lending limits imposed by the Federal Housing Administration last year took a big bite out of the reverse-mortgage market. Now, lenders are looking to gin up new business, partly to satisfy investor demand for government-backed mortgage securities, known as Ginnie Maes, which include reverse mortgages. To attract new borrowers, some lenders are waiving loan-origination fees and other upfront charges, which could save you up to $10,000 and increase the amount you can borrow by the same amount.

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