A class action lawsuit filed last week in Texarkana accuses a national lending company of taking advantage of senior citizens with reverse mortgages.
Texarkana lawyers Jim Wyly and Sean Rommel filed a complaint against Nationstar Mortgage LLC, doing business as Champion Mortgage Co., on behalf of Red River County, Texas, resident Tommy Lawrence. The complaint, filed Thursday in the Texarkana Division of the Eastern District of Texas, seeks to include anyone in the U.S., Puerto Rico and the U.S. Virgin Islands with a reverse mortgage through Champion or with a reverse mortgage acquired by Champion who have been charged certain fees.
A reverse mortgage loan or home equity conversion mortgage allows homeowners 62 or older to convert a portion of the equity in their house into cash. When the homeowner dies or sells their home, the loan is paid back.
"This case is not about the practice of charging set-aside fees or mortgage insurance premiums," the complaint states. "This case involves Champion's failure to properly disclose or account for the payment or application of set-aside fees or mortgage insurance premiums over the life of the loan, in a balance payoff, or for satisfaction of the loan. Through these deceptive practices, Champion improperly acquires monies from plaintiff and the class."
Wyly said the suit seeks to answer, "How does the company account for these fees, and where did the money go?"
Tommy Lawrence and his wife, Lillie Lawrence, took a reverse mortgage in August 2009 that was later purchased by Champion. When Lillie Lawrence died in 2014, Tommy Lawrence decided to sell his home. Confused by the amounts he was being charged for servicing and "set-aside" fees, Tommy Lawrence asked Champion for an explanation, the complaint states.
According to the complaint, Champion's response to Lawrence's questions didn't clearly explain the thousands of dollars in charges and fees.
"Accordingly, Mr. Lawrence was either forced to accept Champion's stated balance for payoff in order to close on his home or reject the balance and lose the sale of his house. He moved forward with the sale, paid off the note to Champion in accordance with the payoff balance given by Champion, and then turned to Champion for further explanation," the complaint states.
Champion responded to Lawrence's post-sale inquiries the same way it did to his presale questions, the complaint alleges. The company simply pointed Lawrence to terms in the loan agreement that refer to loan servicing.
"However, on or about Aug. 4, 2015, Champion forwarded a check to Mr. Lawrence in the amount of $537.85. There was no explanation of what the check represented or how the amount of the check was determined. The random amount was simply referred to as 'a payoff refund check.' When Champion was asked why there was now a refund and how did Champion arrive at the $537.85, no response was given. Even with the refunded amount, however, Champion failed to adequately disclose the true payoff balance as it relates to the set-aside and the mortgage insurance premiums and improperly charged plaintiff a higher amount within the payoff balance-resulting in economic harm to plaintiff."
The complaint seeks a court order that would force Champion to clearly spell out what reverse mortgage borrowers are being charged as well as damages for Lawrence and others "similarly situated."
Champion has not yet been served with a copy of the complaint. The case is assigned to U.S. District Judge Robert Schroeder.