The testimony of Sandy Jolley, a reverse mortgage suitability and abuse consultant, about the proposed OneWest and CIT Group merger is featured in its entirety below. If you were unable to attend the hearing, CRC live-blogged it here and you may also find our CIT Group/OneWest Merger resource page helpful as well. Pictures are available here.
TESTIMONY OF SANDY JOLLEY
FEDERAL RESERVE BANK, LOS ANGELES BRANCH
My name is Sandy Jolley. I am a Reverse Mortgage Suitability and Abuse Consultant and Certified HUD Counselor.
Reverse Mortgage servicing provides billions of dollars in revenue to OneWest Bank (OWB). Of the 6 major loan servicers OWB holds position 1 through 5 as the worst servicer by far.
My testimony illustrates OneWest Bank’s consistent and deliberate failure to comply with Federal Regulations, State Laws, and Consumer Protections in the servicing and foreclosure practices of Reverse Mortgages.
Repayment and Single Point of Contact
The most common maturity event is the death of the borrower. The family is grieving when they get a repayment letter that is confusing, contradictory, deceptive, and frankly no consumer could understand what this letter says.
The repayment letter makes it critical to have a Single Point of Contact and Customer Support Staff trained in:
a) the regulatory requirements,
b) the maturity/foreclosure process,
c) to provide guidance, and
d) to help the consumer understand and exercise their rights and options.
All OWB documentation states a Single Point of Contact (SPOC) will guide the consumer through the process, yet as you will hear today, that is not happening.
In addition, the “customer support” representatives at Financial Freedom also:
- Obstruct consumer efforts to repay the loan balance or the 95% option;
- Refuse to grant HUD authorized time extensions;
Financial Freedom also:
- Makes a legal determination on the validity of consumer documents
- Refuse to speak to heirs without proof of legal authority.
- Require the consumer to record their Trust – a violation of consumer privacy rights, state laws and federal regulations.
Accelerates foreclosure and auction
- Initiate foreclosure as soon as 60 to 90 days after the death of the borrower:
- Use State laws to violate HUD regulations to accelerate foreclosure.
- Auction property when consumer has provided proof funding or contract for sale.
- Charge unauthorized legal and foreclosure related fees caused by acceleration of foreclosure;
- Claim Non-borrowing spouses have fewer rights than other heirs.
The non-borrowing spouse issue is a mess and not because of the consumer.
We have all heard the commercials “A reverse mortgage is a safe government insured loan used to supplement retirement and allows seniors to stay in their homes until they die”.
No couple thinks on their own “let’s get a reverse mortgage and take one of us off title so when the other dies the survivor can be evicted.”
This is a problem caused by HUD, by the Lender at origination and made worse by the OWB practice of accelerating foreclosure. ML 2015-03 excludes virtually all surviving spouses from relief as evidenced by Secretary Castro’s letter in my supplemental documentation.
I urge regulators, HUD and OWB to come together in a responsible way.
Put a moratorium on foreclosures for Non-Borrowing Spouses until HUD has a policy that is a clear solution for Surviving Spouses.
- I urge regulators to deny the application of OWB and Cit Financial.
- Investigate, audit, and review individual OWB Reverse Mortgage Loan Files:
- for the servicing and foreclosure deficiencies I have put forward
- to ensure compliance with existing laws and regulations and especially consumer rights.
The supplemental documentation submitted with my testimony supports the facts of my testimony.