Although most of the dust has settled in the bankruptcy declaration by former reverse mortgage industry leader Reverse Mortgage Funding (RMF), the State of Hawaii alleges it is owed years of unpaid taxes, according to court documents reviewed by RMD.
The State of Hawaii’s Department of Taxation assigned a delinquent tax collection assistant to monitor the bankruptcy proceedings of RMF, and to “determine whether obligations regarding tax liabilities are being satisfied.” The assistant claims that at various points between tax years 2014 and 2022, RMF failed to file different kinds of required tax returns.
As the bankruptcy proceeding was unfolding, the state in May filed a proof of claim against RMF parent company Reverse Mortgage Investment Trust (RMIT) saying that the company did not file the required State of Hawaii general excise, county surcharge and withholding tax returns between 2014 and 2022.
“The [company] did not […] meet the requirement of all applicable state laws and to pay all state taxes by not filing all Hawaii state tax returns,” the document said. “Thus, Hawaii is unable to to determine the amount of the [company’s] priority and unsecured taxes.”
The company has not “provided any documentation to support adjustment of Hawaii’s claims,” the state alleges. “Unless the [company] can provide proof that the amounts in Hawaii’s Proof of Claim are erroneous, Hawaii’s claims are valid and should be allowed.”
Additionally, the state alleges that RMF did not file required state income tax returns from 2015-2022, and says that such returns have not been received by the state as of August 11.
Representatives for RMF currently overseeing the company’s liquidation process declined to comment for this story. According to court documents, a hearing on this matter is scheduled to take place on September 26.
This is the latest development in the bankruptcy of RMF, an occurrence that sent shockwaves through the reverse mortgage industry late last year and which was the first in a series of lender exits and consolidations that continues to remake the pecking order of reverse mortgage industry leadership.
Last month, Longbridge Financial purchased a portfolio of private-label securitizations from RMF, and the company’s HECM-backed securities (HMBS) portfolio under the control of Ginnie Mae continues to account for one-third of the industry’s total securities issuance.