Friday Round-Up: Ocwen Gets Sued, Reverse Mortgage Research

In recent reverse mortgage news, researchers revealed there’s no reason older Americans should be avoiding reverse mortgages, and a multi-state mortgage servicer was slapped with a lawsuit. The media also continued to shed a positive light on reverse mortgages this week.

As a wrap up to your week, here’s a recap of the most-read RMD articles.

Researcher: No “Rational Reason” to Avoid Reverse Mortgages— A research economist at Boston College’s Center for Retirement Research shared that there’s no reason the public should be avoiding reverse mortgages. There is a lack of understanding, which results in fear for many older homeowners, he shared with RMD.

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Ocwen’s Bad Day: CFPB Lawsuit, 20+ State Regulatory Orders—Ocwen Mortgage Servicing, Inc. (NYSE: OCN) was served this week with a federal lawsuit from the Consumer Financial Protection Bureau (CFPB) as well as an action that took away the company’s ability in more than 20 states to take on new mortgage servicing rights.

CNBC: Financial Planners “Remiss” to Not Suggest Reverse Mortgages—A financial advisor, featured on CNBC, advocated for reverse mortgages and shared that the product is one “innovative approach” to protecting older Americans’ portfolios.

Reverse Mortgage Broker’s Years-Long Fight with Mass. AG Comes to Close— The practice of pressuring homeowners into taking out a reverse mortgage to invest in annuities came to light once again after a woman in Massachusetts filed a complaint to the attorney’s general office. The case has come to a close, but not without a fight from the broker who originated the loan.

Startup Could Introduce Reverse Mortgage Alternative—A startup that launched in 2015 as a home equity-extracting company is beginning to see older HECM-eligible consumers as potential clients for the alternative options it offers to a reverse mortgage, which could pose a new threat to established reverse mortgage lenders.

Written by Alana Stramowski

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  • Ocwen, the parent of Liberty, made an otherwise interesting week, an awful one. Talking about reducing the trust in a lender. The one thing connected to the borrower where the lender/servicer MUST act in accordance with the standard of a fiduciary, escrow accounts, Ocwen could not even do that.

    Originators try so hard to gain trust and along comes a servicer like Ocwen and all that effort is thrown out the window. Those who warned about the dangers facing the industry with the addition of Ocwen proved to be right.

    The question is what action will NRMLA take against Ocwen for its violation of the most sacred trust with borrowers in a servicing relationship, not acting like a fiduciary when it comes to escrows set up for taxes and insurance. How in the world will they do ANY better with LESAs? Perhaps eliminating any participation in its Western Regional Conference could be a good starting point. Where is Otto Kumbar in all of this?

    Removal and replacement of servicing leadership at Ocwen and servicing reformation should be in play. Ms. Galante should be leading the Board in this regard. If leadership at Ocwen is this weak, NRMLA should be looking at other steps to let Ocwen know such conduct is not acceptable as to reverse mortgages generally and LESAs specifically.

    Now is the time to be making statements against such activities not years from now.

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