Published May 16, 2017 22:56
ANOTHER EXAMPLE OF ONEWEST BANK CUTTING CORNERS
San Francisco, CA May 16, 2017—Earlier today, the US Dept. of Justice announced a $89 million whistleblower settlement with Financial Freedom, a reverse mortgage servicer owned by CIT Group, which is alleged to have fraudulently sought reimbursements from the Federal Housing Administration related to insurance on reverse mortgage loans.
Paulina Gonzalez, executive director of the California Reinvestment Coalition, released this statement:
“Joseph Otting was the CEO of Financial Freedom’s parent company (OneWest Bank) for most of the time when these practices are alleged to have occurred. Mr. Otting is also rumored as a nominee for the next Comptroller of the Currency. While accountability for bad behavior is good, this settlement is another example of Mr. Otting and his former boss, Steve Mnuchin, ignoring rules and cutting corners during their time at OneWest Bank.
If Mr. Otting is nominated, the US Senate will likely have questions about whether overseeing a company that subsequently entered into an $89 million whistleblower settlement for allegedly defrauding the US government is a good qualification for serving as the next Comptroller of the Currency.
There’s also a lot of unanswered questions about this settlement. For example, were any seniors and/or their families harmed by these practices, and if so, will they be eligible for any relief? How many loans did Financial Freedom seek reimbursements for that it should not have? What steps has Financial Freedom, the Dept. of Justice, or HUD taken (if any) to prevent this from happening again?”
Kevin Stein, deputy director of the California Reinvestment Coalition adds:
“A number of senior homeowners and their families have reached out to CRC about problems they’ve faced at Financial Freedom during the past several years. While we’ve referred them to legal and housing counseling organizations and suggested making CFPB complaints, we remain concerned about the harm caused to seniors or their families if Financial Freedom is not following the rules. We note with interest that Financial Freedom’s parent company, CIT Group, recently disclosed receiving subpoenas from the Attorney General of New York.
Our own research into Financial Freedom, based on a FOIA request to HUD, revealed it has been foreclosing on homeowners at about twice the rate that would be expected, given their share of the reverse mortgage market. We’ll continue to monitor Financial Freedom and refer homeowners that contact our organization to legal and housing counseling resources.”
1) A press release from Sandy Jolley, whistleblower who filed the complaint, is available here.
2) Seniors and their family members who contacted CRC about Financial Freedom have complained about the following issues:
· Financial Freedom allegedly giving homeowners and their heirs inaccurate, incomplete, and conflicted information about their options to retain their homes or to pay off their loans;
· Financial Freedom allegedly force-placing insurance and paying property taxes prematurely on behalf of homeowners; and
· Financial Freedom allegedly not informing homeowners, surviving spouses and/or their heirs about all of their options to retain their homes.
3) In its most recent 10-Q, filed on May 8, 2017, CIT Group disclosed that it had received subpoenas from the New York Attorney General’s office related to Financial Freedom.
4) According to a FOIA request filed by CRC, Financial Freedom was responsible for 39% of the HECM foreclosures that were filed between April 2009 and April 2016. But, according to CRC estimates, Financial Freedom only serviced about 17% of the market. In other words, Financial Freedom appears to have been foreclosing at more than twice the rate as would be expected based on the size of the market it is servicing.