New York Attorney General Settles Reverse Mortgage Disclosure Dispute With Nationstar

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The New York Attorney General’s Office (OAG) announced a $ 500,000 settlement with Champion Mortgage, the reverse mortgage management division of Nationstar Mortgage, over allegations that Champion failed to provide notices and information appropriate to reverse mortgage borrowers to protect their homes. default or foreclosure. The terms of the settlement also state that Nationstar is under no obligation to admit or deny the findings of the OAG.

Following the settlement, Nationstar will donate $ 500,000 into a relief program led by New York Attorney General Letitia James called the Equitable Reverse Mortgage Assistance (ERMA) program, launched in 2020 and dedicated to limiting cases of displacement among senior homeowners by providing low-cost loans to reverse mortgage holders who are at risk of defaulting due to municipal property taxes, home insurance obligations or other charges arising from a temporary inability to pay.

According to the Attorney General’s office, the additional $ 500,000 in funds will be specifically intended to assist Nationstar / Champion clients who take advantage of the benefits of the ERMA program.

The dispute

The main problem, according to the New York Attorney General’s Office (OAG), is that Champion Mortgage allegedly sent “misleading” information to its reverse mortgage borrowers in New York State, or failed to provide clear information to help. borrowers at risk of losing their homes avoid this eventuality. One example cited by the OAG includes an incident alleging that Champion sent over 3,000 “pre-foreclosure” letters to reverse mortgage clients whose loans were either in default or had been expedited but not yet sued by Champion.

“These letters thus created the misleading impression that Champion had already sued borrowers for foreclosure, which could cause confusion and prejudice to senior homeowners who received these notices,” explained the OAG settlement.

The OAG also says that in situations where a borrower’s property taxes were paid by the manager without the borrower’s knowledge, borrowers in some cases made those payments, resulting in the same payments being made. property tax have been carried out twice.

“Champion’s payment of taxes without adequate notice may also have resulted in the inability of some borrowers to make alternate arrangements or avoid the costs (or risk of default) associated with tax payments made by their loan manager. », Indicates the regulation. “By virtue of the facts described above, the OAG concludes that certain communications and actions of Champion were deceptive and unlawful.”

The rule

Under the terms of the settlement, Nationstar / Champion “neither admits nor denies the findings of the OAG” and has “accepted this assurance in settlement of the findings of the OAG described above and to avoid the time, expense and distraction of litigation. “.

As another condition of the settlement, Champion will pay ERMA $ 500,000, which will assist affected reverse mortgage borrowers at risk of displacement in all New York boroughs, as well as in Nassau, Suffolk, Albany, Broome, Dutchess, Erie, Monroe. , Onondaga, Orange and Westchester counties.

In addition, the OAG states that Champion has agreed to change some of its practices, including improving notifications to borrowers regarding tax payments on their behalf; use plain language to provide borrowers with information and services that can help them avoid foreclosure or default; and providing direct contact information to nonprofit housing advisers, government officials, legal service organizations and lawyers to help homeowners understand and take advantage of all available loss mitigation opportunities.

Champion also agreed to “comply with New York law when making property payments and communicating with at-risk homeowners,” and stopped sending letters that the OAG called “misleading,” according to a statement from the OAG.

“This pandemic is hurting all Americans, but our seniors are particularly at risk,” Attorney General James said in a press release announcing the settlement. “No one should be faced with the threat of losing their home, and businesses have a responsibility to provide transparency and fairness to borrowers and homeowners at risk. These funds will provide much-needed help to ensure our seniors have access to permanent housing, and this action is warning companies that we hold them to their obligations to their customers.

ERMA mission, recent history of Nationstar

ERMA is overseen by Special Assistant for Housing and Community Development Kerri White, and the $ 500,000 injection has been welcomed by organizations such as the Center for NYC Neighborhoods and Enterprise Community Partners. The OAG also included a statement from a couple who benefited from the intervention of ERMA, Ann and David Yeaw of Monroe County, who were over $ 20,000 in arrears on property tax payments before learn about ERMA and ask for its help.

“We were in dire straits because of all that had piled up in five years from medical bills and other expenses,” Ann Yeaw said in the OAG press release. “Without ERMA, we would not be safe today. We were going to lose the house.

RMD has sought comment from representatives of Nationstar, but has not received a response at press time. Recently, a dispute arising from a 2015 purchase contract in which Nationstar Mortgage acquired the reverse mortgage services portfolio from former reverse mortgage lender Generation Mortgage was decided in favor of Nationstar, which sought compensation from Generation for certain losses on the portfolio of services purchased.

Read the rules at the New York OAG website.

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