Founded in Houston in 2007, Reverse Mortgage Solutions entered the industry solely as a servicer, and didn’t start originating loans until 2011. It soon became one of the most industry’s leaders, which made it attractive enough for the Florida based Walter Investment Management Corporation to purchase for $122 million. At the time, the loan banking firm was worth roughly $1. 3 billion and seemed optimistic about its future — enough, at the least, to buy an alternative opposite mortgage originator, Security 1 Lending, right here year for roughly $31 million, as well as buying $12 billion in servicing rights from Wells Fargo, which had exited the industry in 2012.
But industry watchdogs, in addition to the Consumer Financial Protection Bureau, say many ads are deceptive. A June 2015 study by the CFPB claimed that many advertisements “contained confusing, incomplete, and erroneous statements regarding borrower requirements, government coverage, and borrower risks. ” This is at odds with a 2012 survey commissioned by the National Reverse Mortgage Lenders Association that found borrowers were savvy and well knowledgeable; 88 percent of the 501 borrowers interviewed rated their common experience with opposite loan loans as useful. The complaint also alleged that Reverse Mortgage Solutions took things a step extra by violating the Real Estate Settlement Procedures Act, which barred the company from “being both the servicer and the vendor. ” According to the complaint, RMS circumvented the law by using straw companies to act as the vendor. In one case, according to the criticism, RMS claimed that a Flatonia, Texas based company called Unified Real Estate Management liquidated RMS’s foreclosed properties.
That agency amassed commissions at closing, keeping a small fee, while kicking anything else back to RMS. Unified Real Estate Management seems to have gone out of company after approximately three years, when its owner died in 2016 at age 82. “All those things they say in those reverse loan commercials are traits of a reverse mortgage — that’s not what a reverse loan is,” Jolley said. “‘You can stay in your home for all times’ — well, is that feature applied to the individual applying for this loan?You know, ‘you could have extra income’ — well, maybe which you can and perhaps that you can’t; does that apply to your situation?So they want to get out of touting the qualities of it and start talking about what it is, and what the consumer must know and do to get one safely. ”A borrower’s health issues, irrespective of how severe, are sometimes no cause for a lender’s concern.
Harris County District Clerk data show that one Legal Aid client, an 83 year old woman bedridden since 1996, who received a reverse mortgage loan from MetLife in 2009, faced foreclosures in 2016, after the loan was bought by Champion Mortgage. Side note: Champion’s parent agency, Nationstar, has announced that this month it is officially altering its name to “Mr. Cooper,” a christening that was chosen after Nationstar conducted an exhaustive evaluation of “thousands” of names.