Washington State Sues Insurance Agent for Reverse Mortgage Scheme

A Washington insurance company is being sued by the state’s Attorney General’s Office for deceptive sales practices it has allegedly been using to convince elderly homeowners to take out a reverse mortgage and then buy an annuity with the proceeds.

The state filed a suit on Monday against a Bellevue insurance agent and his business partners, saying they preyed on more than 30 senior consumers who were usually widows aged 80 or older. 

Defendants Henry William Dailey, Janet Sparks, and Deborah Higgins of TEAM Services LLC and Team Insurance Services LLC have been selling reverse mortgages, annuities, and living trusts to senior citizens since 2007, the court papers say. 


Although none of these products individually are illegal, the defendants failed to make proper product disclosures, used deceptive sales tactics to sell those financial products, and made unfair representations concerning real estate documents and investment advice, according to the lawsuit. 

The defendants would allegedly persuade seniors to take out a reverse mortgage or refinance an existing one to access the maximum amount of home equity, court documents say, and then convince them to invest their proceeds into annuity products to the defendants’ own financial gain. 

Many times, the defendants would include false information in the annuity applications so they would be approved by insurance companies, says the AGO, and several victims later learned their signatures had been forged on the applications. 

Then, after a year, the defendants would allegedly revisit their victims and convince them to surrender the first annuities to reinvest the money in annuities with a different insurance company—allowing them to again receive additional commissions, while the seniors lost thousands of dollars in surrender penalties. 

As a result of these schemes, the defendants made hundreds of thousands of dollars in commissions from reverse mortgage loans, annuity sales, and estate document sales, despite none of them being licensed attorneys with the ability to create estate documents such as living trusts. 

The AGO is filing for injunctive and other relief under the Consumer Protection Act. 

Written by Alyssa Gerace

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  • Many questions arise. With some date in 2007 as the start of these alleged transactions, did any of them occur after July 29, 2008 (the day before President GW Bush signed HERA into law, assuming some, if not all, of the reverse mortgages were HECMs)? While the number of transactions are not substantial neither are they inconsequential.

    The real question for our little industry becomes what involvement or knowledge did lenders have in these transactions? How our industry handles the situation will speak to Congress and the general public about how we monitor TPO activities (if in fact some of the reverse mortgages were funneled through TPOs) and lenders monitors their retail units.

    So if a fraud mill of this magnitude existed at the point when many industry participants were proclaiming these problems were things of the past, how many other such operations are looming out there in the shadows? Let us not lose sight of the fact that we need a quick industry response condemning any such activities especially where HECMs are involved.

    If these allegations turn out to be true let us hope the participants are prosecuted to the fullest extent of each and every law they violated.

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