HUD Denied Our Fee Waiver for a FOIA Request About Reverse Mortgage Complaints

It would appear that HUD does not want CRC, nor the general public, to know more information about reverse mortgages, complaints about them, or foreclosures on surviving spouses.

In late 2014, we submitted a Freedom of Information Act (FOIA) request to HUD, asking, among other things for data related to:

  • the number of complaints that have been filed to HUD about reverse mortgages serviced by Financial Freedom;
  • any data on estimates of the number of non-borrowing spouses who could face foreclosure if their reverse mortgage borrowing spouse were to pass away;
  • the number of complaints made against Financial Freedom, a reverse mortgage servicer that is owned by OneWest Bank, a bank which is trying to merge with CIT Group; and
  • the number of foreclosures on surviving spouses by Financial Freedom since April 2009, and the number of foreclosures for the industry as a whole.

In December 2014, HUD denied our request for a fee waiver.   We appealed.

Today, we heard back that we have lost our appeal.  HUD’s letter to CRC suggests that we failed to meet the criteria that “the disclosure of the information would contribute significantly to the public’s understanding of government activities or operations.”

To understand why this is so problematic, consider why we submitted a FOIA request in the first place.

For years, reverse mortgage brokers have been telling couples that it is okay to remove the younger spouse from the title of the home in order for the older spouse to obtain a reverse mortgage.  Couples were told there was no chance the younger spouse would be kicked out if the older spouse were to pass away, or in other cases (like this one), they were told the younger spouse could be added onto the mortgage as soon as they turned 62.  All of this was done with HUD turning a blind eye to this practice.  Unfortunately, as the older spouses have passed away, reverse mortgage servicers have been moving to foreclose on the surviving spouse.

HUD is already being sued for enabling these foreclosures and as a result, a federal judge ordered HUD to develop a policy to assist theses non-borrowing, surviving spouses.  The policy that HUD announced in January is NOT expected to help any surviving spouses because it relies on the servicer’s discretion and because it would likely require the surviving spouse to come up with a large lump sum of cash.  For more on this, see today’s press release:  Advocates: Grandma May Get Run Over By HUD’s New Reverse Mortgage Policy

So, what should one conclude from HUD denying a fee waiver for our FOIA request because granting it would NOT contribute significantly to the public’s understanding of government activities or operations?

We feel the public would gain a lot from this knowledge.

A 2013 story below illustrate why we think it’s important for HUD to disclose this information.  Stay tuned to hear our next steps.

Reverse Mortgage Nightmare

WFMY News2Reverse Mortgage Nightmare: Widow Facing Foreclosure

WINSTON-SALEM, N.C.– In 2007, a knock at Barbara Freeman front door, came with a great opportunity: to be debt-free and take care of her sick husband.

This year, another knock at that same door was a sheriff’s deputy serving foreclosure papers — and that’s when her nightmare began.

The widow is now at the brink of losing everything she and her husband worked for all because of a reverse mortgage. In the most simplified terms, reverse mortgages differ from “regular mortgages” because in the latter, a homeowner makes monthly payments to a lender.

Watch the full story here: Reverse Mortgage Nightmare: Widow Facing Foreclosure

 

Lack of Single Point of Contact With Financial Freedom Reverse Mortgage (Owned by OneWest) Not Helpful for Heir

The testimony of Michael Allen, a surviving family member of a OneWest reverse mortgage borrower, 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 of the rally against the merger are available here.

TESTIMONY OF MICHAEL ALLEN

PUBLIC MEETING FEBRUARY 26, 2015, 8 AM to 4 PM

FEDERAL RESERVE BANK, LOS ANGELES BRANCH

Thank you for the opportunity to testify today.  My testimony is in opposition to the proposed merger of OneWest Bank and CIT Financial.

My name is Michael Allen.  I live in Phoenix, Arizona.  I am Successor Trustee for my mother, the borrower of a Financial Freedom reverse mortgage.

My mother’s intention for her estate was for her family to sell the home to repay the loan.  She died on June 12, 2014

At all times, I was in compliance with HUD regulations to the best of my ability based on the limited information provided by OneWest Bank.

OneWest Bank (OWB) did not provide a Single Point of Contact nor provide any guidance or instruction to help me satisfy the loan.

I initiated all calls to OWB and spoke to a different person with a different story and different reason to deny my requests.

OWB claimed they didn’t get my documents time after time.  THEY DID

OWB sent me a short sale packet twice after I wrote saying I wanted to pay the lesser amount of the loan balance.  The appraised value was about $35,000 more than the loan balance.

OWB refused to perform or pay for a HUD required appraisal.

I called OWB on October 1st to inform them a sale was in process.

On 11/3 I received notification that OWB had recorded a Notice of Trustee sale on September 29, approx 3 months after my mother’s death and 2 months after receipt of the repayment letter.

OWB used Arizona foreclosure laws to violate HUD regulations and my right to time to sell the property.

I called OWB  – they refused to postpone auction.

The auction was cancelled with HUD intervention.

OWB added foreclosure related legal fees and drive by appraisal fees to the payoff.

The only phone call I ever received from OWB was on December 19 to tell me they have no intention of removing the accelerated foreclosure fees.

My story is illustrative of OneWest Bank’s violation of my right to repay the loan, the acceleration of foreclosure, and the related legal and appraisal fees of $2,508.50 and an unidentified servicing advance of $1,839.00 we did not receive.

I should not have to pay for OneWest Bank’s violations of HUD regulations or my rights.

I request an Investigation, audit, and review of OWB Reverse Mortgage Loan Files

  • For the servicing violations of Federal Regulations and consumer rights
  • To ensure compliance with existing laws and regulations.

Thank You!

Documented evidence of my testimony can be provided upon request.

New Resource for Widowed Homeowners Facing Foreclosure

2016  Update: New legislation introduced by Mark Leno and Cathleen Galgiani provides critical protections for widowed spouses and other survivors who assume home ownership responsibilities when the primary mortgage holder passes away. The Homeowner Survivor Bill of Rights, (Senate Bill 1150) closes a loophole in California law that fails to provide surviving spouses and children important protections against foreclosure that are available to other homeowners.  

Visit www.survivorbillofrights.org to learn more about this important new bill.

Last week, the California Reinvestment Coalition released our 10th Survey of housing counselors and legal aid lawyers to measure how well banks and mortgage servicers are helping homeowners who request assistance in avoiding foreclosure.

As part of the survey, 11 homeowner stories and declarations were also included in the report from homeowners who had worked with attorneys at Housing and Economic Rights Advocates.  Even working with attorneys, homeowners still faced unreasonable delays, requests for the same paperwork on multiple occasions, incorrect loan modification denials, wrong information about investors, and more.

While there were a number of troubling trends in the report, 87% of respondents said they felt that the “widows and orphans” problem still exists, despite federal guidelines released by various agencies in 2013.  The “widows and orphans” problem refers to the fact that many widows, orphans, and others who inherit or have an ownership interest in property have faced foreclosure upon the death of a loved one because they were not listed on the loan, and the servicer would not work with them so that they could keep the family home.

While the CFPB, Fannie Mae, Freddie Mac, and Treasury Department released updated guidelines in 2013, (see the full report for citations) housing counselors report that mortgage servicing staff aren’t always aware of the rules.

To shed further light on this issues, Housing and Economic Rights Advocates (HERA) has created an email address.  For widowed homeowners, or other heirs in similar situations, they can contact HERA via email at: familyhome@heraca.org.  HERA staff will make contact with each person that submits a story to that email address.

July 8, 2014 update: The CFPB issued additional guidance today to banks and mortgage servicers about working with widows and other heirs who are trying to keep their family homes.  You can read it here: CFPB Clarifies Mortgage Lending Rules to Assist Surviving Family Members

A few media stories illustrate the very human impact of bank and mortgage servicer red tape on surviving family members:

1)     Bank might foreclose on home because late husband isn’t residing there

“WASHINGTON — Billions of dollars in foreclosure settlements between big banks and government regulators haven’t helped Laura Biggs. The California woman is scheduled to lose her home nine days before Christmas because her mortgage company concluded that the house is no longer the primary residence of her husband, who’s been dead since 2003.”   Read complete story here: “Bank might foreclose on home because late husband isn’t residing there” (Kevin Hall, McClatchy Washington Bureau, December 9, 2013).

2)     Mortgage Catch Pushes Widows Into Foreclosure

“Ms. Bates, 70, is caught in a foreclosure trap that is ensnaring widows across America: she cannot get help lowering her payments until her name is added to the mortgage note, but the lender says she must be current on payments before that can happen.”  Read complete story here: Mortgage Catch Pushes Widows Into Foreclosure (Jessica Silver-Greenberg, New York Times, 12/1/2012)

3)     Call Kurtis Investigates: Surviving Family Members Losing Homes Left By Loved Ones

“ELK GROVE (CBS13) —The mortgage was in her late husband George’s name. The decorated war veteran died in 2007.  Daughter, April, says she sent Green Tree his death certificate and the grant deed with her mother’s name on it, but says Green Tree will not work with them.”  Read complete story here:  Call Kurtis Investigates: Surviving Family Members Losing Homes Left By Loved Ones (CBS Sacramento, 11/1/2013)