Reverse Mortgage Scam Alert! Novad Management And FHA Defraud Florida Army Veteran
SENIORS BEWARE! There is another reverse mortgage scam going on. Again, it’s the mortgage servicers trying to steal from seniors. What makes it worse is this time it’s the federal government doing it. That’s right. FHA and it’s mortgage serving company, Novad Management Consulting are ripping off seniors. So be diligent because they are trying to scam you out of hundreds of thousands of dollars.
So here’s an example of their latest scam that apparently has the backing of the US Department of Housing and Urban Development aka HUD. But first, let me give you a primer on how Reverse Mortgages work.
Reverse mortgages are home equity loans that allow you to convert part of the equity into cash. This can be an attractive option for senior citizens who may find themselves “house rich” but “cash poor.”
Equity is the difference between the appraised value of your home and your outstanding mortgage balance. The equity in your home rises as the size of your mortgage shrinks and/or your property value grows. In a reverse mortgage, you are borrowing money against the amount of equity in your home.
As the name says, reverse mortgages work like a traditional mortgage, only in reverse. Instead of a borrower making payments to a lender, the lender makes payments to the borrower. Most reverse mortgages do not require payment of principal, interest, and fees as long as you live in your home. The homeowner can use the money for anything. The lender will require the homeowner to pay off the balance of any existing mortgages.
Is This A New Reverse Mortgage Scam Or Simple Mismanagement?
In thirteen years battling lenders and Wall Street, Tom Lennon’s case is a first. Back in August, US Army veteran Tom Lennon decided to pay off his reverse mortgage (I have never had a client want to pay off a reverse mortgage). He contacted his reverse mortgage servicer, Champion Mortgage about how to pay off his reverse mortgage and Champion emailed him wiring instructions and his payoff figure of $171,939.78 that was good through September 1st.
On August 20th, Tom wired transferred the $171,939.78 from his TD Bank account to Champion Mortgage’s account at JPMorgan Chase. Tom assumed Champion Mortgage would record a Satisfaction of Mortgage with the Collier County Clerk.
However, that’s not what happened. Less than a week later, Tom received a letter from Champion informing him his loan had been transferred to FHA. The letter also informed him that FHA was using Novad Management Consulting to service the loan.
MFI-Miami contacted Champion to inquire about the wire transfer of $171,939.78. Champion informed us they were no longer in possession of the file because they sold the loan to FHA. Champion informed us we needed to contact Novad.
Reverse Mortgage Scam Alert: Did Champion Mortgage Knowingly Violate Federal Law?
This alone is a serious violation of both the Dodd-Frank Act and the Truth-In-Lending Act (TILA). Lenders are to notify homeowners before the transfer of the servicing occurs. They failed to notify the Lennons of the pending transfer. Yet, they collected the $171,939.78 from Tom Lennon days before the transfer.
Champion also failed to notify the Lennons that they also sold the note and mortgage to FHA. This is also a requirement under the Dodd-Frank Act.
TILA requires lenders to keep mortgage records for 12 months after the loan servicing is transferred or the file is closed.
Champion still has not responded to my request for documents I sent them the first week of October. Failure to comply with QWR is also a TILA violation.
All these TILA violations allow Tom Lennon to seek hefty payouts and attorney fees from the parties involved.
Reverse Mortgage Scam Alert: Dealing With Novad Management Consulting & FHA
I’ve had to deal with a lot of pain in the ass mortgage servicers over the past 13 years. However, I have never dealt with one as irritating and frustrating as FHA servicer, Novad Management Consulting.
It took Novad and FHA nearly two months to give us any answers about what was going on Tom Lennon’s reverse mortgage.
Novad finally responded at the end of October. They informed us that the $171,939.78 payoff figure from Champion Mortgage was incorrect.
Novad claimed there was still an outstanding balance of $580.74. They also informed us that they would not record a satisfaction of the mortgage with the Collier County Clerk until it was paid.
However, this contradicts the October mortgage statement from Novad. It seems Champion did not make an error in the payoff. The $580.74 is the interest that accrued in September and October and was charged by FHA and Novad.
The Lennons decided to pay the $580.74 just to have this loan closed out. We contacted Novad and FHA for wiring instructions to pay off the loan. Unfortunately, HUD who oversees FHA does not accept wire transfers. They only accept cashier’s checks. Yes, you heard that right. An executive-level federal agency with a $44 Billion budget that answers directly to the President of the United States does not accept wire transfers.
So, on November 4th, Tom Lennon drove to his TD Bank branch in Naples and got a cashier’s check for $580.74. He then stopped by his local UPS store and overnighted the cashier’s check with a copy of the statement to Novad’s corporate office in Oklahoma City.
However, here it over three weeks later and Novad still has not acknowledged receipt of or posted Tom’s payment. UPS indicates Novad received the payment. So why the payment has not been posted is unknown.
To learn more about Reverse Mortgages, see:
Reverse Mortgage Servicing Alert!
Reverse Mortgages: What You Need to Know
Don’t Lose Your Home! You CAN Fight A Reverse Mortgage Foreclosure
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