It’s not every week that the phrase “Spearmint Rhino Gentleman’s Club” appears in a Reverse Mortgage Daily post, so let’s get right into the biggest headlines from the week that was, from accusations about auditors making it rain at strip clubs to serious questions about the language in President Trump’s proposed HUD budget.
Ocwen’s Spicy Accusations Against Auditors, Walter’s Accounting Woes — Ocwen Financial Corporation has certainly had a rough few months, but the embattled servicer came out swinging this week, filing a lawsuit against a state-appointed auditor for allegedly wasting its money. According to Ocwen, Fidelity Information Services — charged by the state of California to monitor the servicer’s operations after a 2015 settlement — blew through a two-year, $44.8 million budget in just 11 months, with employees padding mileage numbers, buying groceries and liquor with Ocwen’s money, and expensing trips to gentleman’s clubs and casinos, including the aforementioned Spearmint Rhino.
Senators Raise Questions About Reverse Mortgages and Trump Budget — Confused about language in the proposed HUD budget that appears to remove protections for non-borrowing spouses of seniors with Home Equity Conversion Mortgages, the bipartisan team of Sens. Marco Rubio and Catherine Cortez Masto — a Florida Republican and Nevada Democrat, respectively — sent a letter asking HUD secretary Ben Carson to clarify the issue. A staffer in Cortez Masto’s Washington, D.C. office told RMD that the senator’s concern came primarily from the removal of language including spouses of borrowers in the definition of the term “homeowner.”
Personal Finance Columnist: Reverse Mortgage Worked for My Dad — Nationally syndicated financial advice columnist Terry Savage told the readers of her hometown Chicago Tribune — and multiple papers across the country — about her father’s positive experience with a reverse mortgage, claiming that the product helped him live out his last 10 years at home with dignity and comfort. We here at RMD read plenty of general-media stories that explain the potential benefits of HECMs, and this one added a personal touch that generally isn’t common in household-finance columns.
Balancing Regulatory Risks and Rewards When Working with Financial Advisors — Working with financial planners has long been touted as a way for HECM brokers and lenders to expand their businesses, but what happens when you run afoul of state conflict-of-interest laws — or what if it isn’t clear whether there are any rules at all? RMD talked to players on both sides of the equation to hear how they walk the fine line between referrals and regulatory headaches.
Alleged Chicago Reverse Mortgage Scammer Faces Indictment — Mark Diamond has been giving reverse mortgages a bad name in Chicago for more than a decade, but the alleged scammer faced his first day in criminal court last week. The federal government charged Diamond with wire fraud and engaging in a financial scheme, according to the Chicago Tribune, with the FBI and HUD accusing Diamond of fleecing 122 older victims for more than $10 million. Diamond primarily targeted African-American homeowners on Chicago’s West Side, posing as a representative of a free city-sponsored home repair program and duping victims into signing HECM paperwork.
Reverse Mortgages Around the Web
Early Defeat for Ocwen in CFPB Suit — Details were scarce as of press time, but a federal judge on Friday threw out an Ocwen request for a review of the Consumer Financial Protection Bureau’s constitutionality, according to Seeking Alpha and Bloomberg. The servicer in April sought an expedited ruling on the issue in the hopes that the CFPB’s authority would be declared unconstitutional, thus erasing the bureau’s April 20 lawsuit against it. Ocwen separately asked for Attorney General Jeff Sessions’s opinion of the issue; that request remained pending, Seeking Alpha reported.
Reverse Mortgages in New Zealand: “Costly Blessings” — Another week, another item from New Zealand about the island nation’s reverse mortgage program. This time, news website Stuff terms the products “costly blessings,” telling the story of couples from Auckland and Christchurch who were able to stay in their homes thanks to a reverse mortgage — but warning that the high interest, which hover around 7%, could prove prohibitive. Only two banks in New Zealand offer reverse mortgages, according to the article, with Heartland Bank counting about 4,000 borrowers.
Written by Alex Spanko