Financial Freedom Settles Alleged Liability for Servicing of Federally Insured Reverse Mortgage Loans for $89 Million
Financial Freedom has agreed to a settlement with
"This settlement represents our office's continued commitment to protecting the financial solvency of vital financial programs designed to benefit America's seniors," said Acting
"
Through 'reverse mortgage' loans, older people are able to access the equity in their homes by borrowing money against the equity they have built in their home. To encourage reverse mortgage loans, the FHA protects lenders from loss by providing mortgage insurance. Under FHA's program, a loan becomes due and payable when the home is sold or vacant for more than 12 months or upon the death of the homeowner, whichever comes first. The lender is repaid the amount of the loan, including the costs of servicing the loan and any interest that accrues on lender expenses after a loan becomes due and payable. FHA will reimburse a lender that is unable to recoup the full amount of the loan. In order to claim recoupment, the servicer is required to meet a number of regulatory requirements and deadlines.
"Today's settlement agreement resolves allegations that this lender failed to comply with FHA servicing requirements and sought to receive financial gains that it was not legally entitled to," said HUD Inspector General
The settlement was the result of the coordinated efforts of the Civil Division's Commercial Litigation Branch, the
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
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