Attorney General James secures $500,000 for homeowners in need of mortgage assistance

Agreement with Champion helps to fund AG’s new reverse mortgage assistance program benefiting senior citizens

New York Attorney General Letitia James announced a $500,000 settlement with Champion, the reverse mortgage servicing division of Nationstar Mortgage LLC, over allegations Champion failed to provide homeowners with the clear, accurate information they needed to help protect their homes.

As part of the agreement, Champion is required to pay $500,000 to the attorney general’s equitable reverse mortgage assistance (ERMA) program, a $3 million pilot program launched in 2020 using settlement funds obtained by the office of the attorney general (OAG). The ERMA program will help customers, specifically senior citizens, from Champion and other reverse mortgage servicers in New York avoid default and foreclosure due to missed property payment, and the additional $500,000 in ERMA funds will be earmarked to assist Champion customers.

In partnership with Enterprise Community Partners Inc. and the Center for NYC Neighborhoods, OAG developed the ERMA program in 2020 to offer low-cost loans to reverse mortgage holders who are at risk of defaulting or are in default on their reverse mortgages due to overdue municipal property taxes, property insurance obligations, or other charges stemming from a temporary inability to pay. The ERMA program will assist borrowers in every New York City borough, plus Nassau, Suffolk, Albany, Broome, Dutchess, Erie, Monroe, Onondaga, Orange and Westchester counties.

“This pandemic is harming all Americans, but our senior citizens are especially at risk,” James said. “No one should have to experience the threat of losing their home, and companies have a responsibility to provide transparency and fairness to at-risk borrowers and homeowners. These funds will provide much-needed assistance to ensure our seniors have access to permanent housing, and this action puts companies on notice that we are holding them to their obligations to their customers.”

The OAG stated, “A reverse mortgage is a special mortgage product only offered to senior citizens, and unlike with traditional mortgages, reverse mortgage borrowers are not required to make monthly payments to their mortgage servicer. The loan is only due to be repaid when the borrower passes away or otherwise no longer lives in the home. Homeowners with a reverse mortgage are required to pay recurring property taxes and homeowners insurance. This puts homeowners at risk of default and foreclosure if they cannot afford those payments or if those obligations were not adequately explained when they acquired the reverse mortgage. Reverse mortgage servicers like Champion are responsible for communication with reverse mortgage borrowers who have defaulted, or in certain situations borrowers who are at risk of defaulting on their loan terms. These servicers are also responsible for providing loss mitigation to reverse mortgage borrowers who are in default or at risk of default, pursuant to the U.S. Department of Housing and Urban Development guidelines.

“The OAG’s investigation concluded that Champion provided misleading information to borrowers, or failed to provide clear, accurate, and non-misleading information needed to assist homeowners who are at risk of losing their homes. For example, OAG found instances where Champion did not provide clear communications with homeowners around the payment of property taxes, resulting in homeowners making such payments twice or interfering with homeowners’ ability to make other payment arrangements that could avoid the costs (or risk of default) associated with tax payments made by their loan servicer. The OAG also found instances where Champion mailed letters to homeowners that gave the appearance that the homeowner had already been sued in foreclosure when in fact the homeowner had not. Champion has ceased sending these letters as a result of OAG’s investigation.”

In addition to providing $500,000 toward the ERMA program, under the terms of this settlement, Champion has agreed to:

√ Improve its notifications to New York borrowers prior to paying property taxes on their behalf.

√ Communicate with New York borrowers in plain language regarding any actions they must take to avoid default or foreclosure.

√ Provide a direct contact for not-for-profit housing counselors, government representatives, legal services organizations, and attorneys for the purpose of helping homeowners to understand and take advantage of all available loss mitigation opportunities.

√ Comply with New York law when making property payments and communicating with at-risk homeowners.

Ann and David Yeaw of Monroe County were more than $20,000 behind on their property taxes when they learned about ERMA.

“We were in dire straits because of everything that had built up in five years because of medical bills and other costs,” Ann said. “If it hadn’t been for ERMA, we wouldn’t be safe today. We were going to lose the home.”