Champion Mortgage To Evict New York Reverse Mortgage Fraud Victim Ron Brophy And His Wife
Or was Champion Mortgage just ignorant of the origination fraud hidden in the file?
Now Champion Mortgage and its parent company, Nationstar could find themselves in the crosshairs of a False Claims Act lawsuit from HUD. HUD loves pursuing lenders who pull origination fraud on FHA insured loans.
How Ron Brophy Became A Victim Of Reverse Mortgage Fraud
When Ron Brophy signed his reverse mortgage documents in 2009 little did he know 1st Reverse Financial committed origination fraud.
1st Reverse Financial lied to FHA. They did it because it’s easy to do. It’s easy to do because approvals are automated. They are based on the information inputted by the loan processor or an underwriter.
In this case, 1st Reverse Financial processors entered fraudulent appraisal information into the FHA system for an approval.
1st Reverse Financial gave Ron Brophy a reverse mortgage in the amount of $352,000. Yet, the property only appraised for $235,000 at the time of closing. Champion Mortgage supplied MFI-Miami with a hard copy of the appraisal used for underwriting.
That appraisal stated the value at $235,000.
Loan-to-Value (LTV) ratios on reverse mortgages are based on the borrower’s age. The older the borrower, the higher the LTV they qualify for. This is guideline comes into play in Ron Brophy’s reverse mortgage.
Ron Brophy was only 66-years old in 2009 when he closed on his reverse mortgage. Due to his age, he was only eligible for a maximum LTV of 55%. This meant he could only have only qualified for a loan amount of $129,250 based on an appraised value of $235,000. Ron Brophy’s value hasn’t increased a lot in in the past 7 years. Orange County Department of Real Property Tax Service Agency appraises the house at $239,000
Ron Brophy’s property would have had to appraise for $640,000 in order for him to qualify for a reverse mortgage of $352,000.
Champion Mortgage Initiates Foreclosure Against Ron Brophy
Reverse mortgages require the borrowers to pay the taxes and insurance on their property. If they don’t, the lender can foreclosure. Ron Brophy broke this cardinal rule of being a reverse mortgage borrower. He forgot to pay his property taxes in 2015 because of health issues.
Normally, reverse mortgage servicers would pay the taxes and work out a repayment plan with the borrower. However, Champion Mortgage didn’t offer this to Ron and his wife. Instead, Champion Mortgage hired Gross Polowy, LLC to foreclose on the Brophys. Gross Polowy is made up former lawyers from Steven J. Baum’s defunct foreclosure mill.
Amber Jurek of Gross Polowy filed a foreclosure complaint on June 17, 2016. Jurek alleges the Brophys owe $256,119.88. However, this is not true. The Brophys only owed $10,000 for the unpaid taxes of 2015 at the time she filed the foreclosure. It is also unclear how Gross Polowy calculated the balance of $256,119.88 on a reverse mortgage of $352,000.
Did Champion Mortgage File A Claim With FHA On A Fraudulent Mortgage?
Lenders who hold FHA insured loan usually file a claim with FHA when the borrower goes into default. This happens regardless if the loan is a conventional FHA loan or a reverse mortgage.
If Champion Mortgage followed typical FHA claims procedure, they filed a claim with FHA to collect on the mortgage insurance. The purpose of mortgage insurance is to cover any deficiencies on the loan. However, the deficiency on the Brophy loan is based on 1st Reverse Financial giving FHA fraudulent information in 2009.
The Brophys have filed a complaint with the Consumer Financial Protection Bureau. The CFPB has alerted Champion Mortgage. The CFPB is investigating the Brophy’s mortgage and has notified HUD. So, stay tuned…