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SERVICING DEFICIENCIES, VIOLATIONS OF FEDERAL REGULATIONS, STATE LAW &
CONSUMER PROTECTIONS

Below are the most common and consistent Servicer violations of Federal Regulations, State
Laws and Consumer Protections in Servicing/Maturity/Foreclosure of Reverse Mortgage loans.  
Multiple items exist in most cases.  These practices result in obstructing the consumer right to
repay the loan, acceleration of foreclosure, wrongful auctions, and inflated FHA Claims.

  • Mislead/deceive Consumers in written and verbal communications and fail to inform the
    consumer of their HUD rights and options;
  • No Single Point of Contact, No Customer Support; refuse to provide guidance to satisfy
    loan;
  • Refuse to grant “HUD authorized time and/or extensions for repayment” to borrowers or
    heirs; Customer Support Reps obstruct consumer from exercising their rights and deny
    requests for payoff statements, appraisals, or all other rights;
  • Claims they did not receive consumer documents such as letter of intent, extension
    request, trust, etc. Or, didn’t receive documents in time, or not in the proper format;
  • Legal Authority:
  1. Refuse to speak to consumers without proof that title has been conveyed as soon
    as 30 to 60 days from the death of the borrower.
  2. Make a legal determination on the validity/and or legal authority of consumer
    documents such as trusts, wills, or affidavit of heirship.  Demand Trusts are
    recorded violating privacy rights, state laws and federal regulations.
  3. Refuse to speak to heirs without proof of legal authority to represent borrower’s
    estate.  May require the consumer to retain legal counsel, or a court order at an
    unnecessary cost to the consumer;
  4. Refuse to wait for probate to be complete before initiating foreclosure.  
  • Accelerates foreclosure and auction 30 to 60 days after the death of the borrower;
  • Appraisals;
  • Charges consumer appraisal fees for exterior only appraisals not in compliance with 24
    CFR 206.125 & HUD Handbook
  • Refuses to perform the HUD required appraisal or provide the consumer with a copy of the
    appraisal to determine the 95% option.
  • Inflates appraisal to prohibit consumer from the 95% option
  • Force Place Insurance
  1. Force Placed insurance cost 10 to 20 time as much as the policy consumer can
    obtain.
  2. Force Placed insurance when the consumer already has insurance agreed to in
    the original contract
  3. When consumers can’t pay the force placed premium Financial Freedom
    forecloses.  
  4. Servicer receives kickbacks from their relationship with the Force Placed carrier.
  • Use of State laws to violate HUD regulations to accelerate foreclosure.  Example: Servicer
    required by Federal Law to communicate rights and options with all known heirs.  Servicer
    uses the CA Notice of Default declaration to claim they do not have to speak to anyone
    (heirs) because they are not qualified borrowers.        
  • Refuse to allow heirs to repay the loan balance;
  • Refuse to allow the heir to repay the loan at the 95% option – short sale;
  • Refuse to allow the heir a Deed in Lieu in the case of a will or intestate borrower unless
    the heir pays for probate.  Can result in a cost to consumer of many thousands of dollars
    for no benefit;
  • Dual Tracking.  Auction property even when consumer has provided proof of loan funds or
    a contract for sale;  
  • Backdating of documents and force placed insurance policies
RECOGNIZING SERVICER WRONGDOING AND CONSUMER
HELP PROGRAMS
Federally funded State Programs to help Borrowers who are behind in tax, insurance, and or HOA
payments.  

HARDEST HIT FUND STATE PROGRAMS

In general the Servicer is supposed to inform the consumer of these programs and initiate the
communication with the program on behalf of the borrower.  This is not always the case.  Make
sure you ask your lender about the programs available in your state.

KEEP YOUR HOME CALIFORNIA - RevMap offers up to $25,000 toward payment of taxes &
insurance.  KeepYourHomeCalifornia.org

FLORIDA ELMORE PROGRAM - Offers up to $50,000 toward repayment of taxes, insurance
and/or HOA fees.  FloridaElmore.org

ILLINOIS HARDEST HIT FUND - Offers up to $35,000 toward repayment taxes & insurance.  
Illinoishardesthit.org

MICHIGAN STEP FORWARD PROGRAM - Offers up to $30,000 toward repayment of taxes,
insurance, and/or HOA fees.  StepForwardMichigan.org

OREGON OHSI PROGRAM - REVERSE MORTGAGE BENEFIT  Offers up to $40,000 toward
repayment of taxes, insurance and/or HOA fees.  oregonhomeownerhelp.org
If you experience Servicing or Foreclosure issues by the Loan Servicer email us
for a no-cost assessment of your reverse mortgage rights and options.  
Knowing your rights and options enable you to exercise the rights that are in
your best interest.