NY attorney general launches investigation of reverse mortgage practices – report

by Ryan Smith20 Jan 2017
The New York attorney general is investigating mortgage servicing practices at units of Nationstar Mortgage and OneWest Bank – the institution once run by Trump Treasury nominee Steve Mnuchin.

Eric Schneiderman is investigating reverse servicing practices at Nationstar’s Champion Mortgage unit and OneWest’s Financial Freedom unit, according to a Wall Street Journal report. According to the Journal, Schneiderman is investigating whether the businesses’ tactics pushed reverse borrowers into foreclosure.

Mnuchin spokesperson Barney Keller dismissed the investigation.

“We’re sure any ‘investigation’ is about nothing more than politics,” Keller told the Journal. CIT, the company that currently owns OneWest, declined to comment.

From the time of its creation until its sale to CIT, Financial Freedom initiated almost 10,700 foreclosures, according to the Journal. That accounted for about 8% of all OneWest foreclosure starts.

Meanwhile, a Nationstar spokesperson told the Journal that the company’s “goal across all of our lines of business is always to treat our customers with caring service and help keep them in their homes.”

Nationstar also told that it hadn’t been made aware of any investigation. The company also noted that 90% of its Champion reverse mortgage customers in New York are current on their tax and insurance payments.
“We’re actively exploring solutions for those still struggling and have been able to help three quarters of past-due customers avoid foreclosure with repayment plans for their taxes and insurance,” a Nationstar spokesperson told HousingWire.

Earlier this month, New York Gov. Andrew Cuomo announced legislative proposals that would expand protections for reverse mortgage borrowers and increase regulations on lenders.

Related stories:
Nationstar to create 600 jobs with new call center
DFS launches wide-ranging probe into reverse mortgages


  • by Sandyj | 1/20/2017 6:21:52 PM

    Anyone who doesn't have a reverse mortgage now and is thinking about it might want to wait until the HUD OIG investigation of Financial Freedom, the NY Attorney General investigation of Champion and Financial Freedom/OneWest Bank, and the dust settles from Walter Investments One Reverse Mortgage exiting the market, and the fallout from the penalties from the RMS whistleblower get sorted out. CIT has set aside $163,000,000 for the settlement of the HUD investigation, $500,000,000 for claims after the settlement, and then there is the $230,000.000 "shortfall" that is possibly for FAH interest not allowed to Financial Freedom. This is a lot of money to make up with a lot of new reverse mortgage sales needed to do it. Beware, it might look good up front but it has to be right for you in the long term and no one is going to help you determine that when you are getting one. Maybe consumers should ask for a written guarantee as to how a reverse mortgage is a safe government insured mortgage, that will let you stay in your home for life, provide extra income, let you live a better life and provide financial security in retirement and finally meet your wishes for your estate.


Should CFPB have more supervision over credit agencies?