The AARP Foundation has become a part of a class-action lawsuit against reverse mortgage servicer Celink and the estate of bankrupt lender and servicer Reverse Mortgage Funding (RMF). The lawsuit, initially filed in late 2022, alleges that both companies added unlawful loan servicing fees, violating reverse mortgage contracts, federal laws, and New York State laws. The complaint specifically accuses Celink of applying companywide policies that result in the imposition of fees, costs, charges, and penalties on Home Equity Conversion Mortgage (HECM) loans serviced by RMF, in violation of borrower protection laws and regulations. The lawsuit was filed on behalf of plaintiff Sheila Dancy-Wilkins and her 93-year-old mother, Flora Mayweathers, representing a nationwide class.
Unlawful Fees and Foreclosure Actions
The lawsuit contends that Celink, under the direction of RMF, added unlawful fees for appraisals, inspections, property preservation, and attorneys’ fees or costs to HECM loans. It also alleges that Celink failed to provide required notices before initiating a foreclosure action, leading to additional unlawful fees being added to the reverse mortgage loan balance. Despite the dismissal of the foreclosure, the plaintiffs continue to face monthly interest charges and fees on what they claim is a wrongfully inflated loan balance. The AARP Foundation emphasized the need to protect vulnerable older homeowners from deceptive and unfair practices, making it one of its strategic priorities.
RMF’s Bankruptcy and Ongoing Legal Proceedings
RMF, once the fifth-largest reverse mortgage lender in the country, filed for bankruptcy in November 2022. The automatic bankruptcy provision delayed further actions against RMF, and the company’s bankruptcy plan administrator indicated that they would not appear on behalf of RMF in connection with the case. The plaintiffs, however, plan to seek a default judgment against RMF, asserting that the class claims are covered by RMF’s insurance policies, potentially providing substantial coverage to satisfy any default judgment. Celink declined to comment on the pending litigation, while RMF’s estate refrained from offering a statement. The lawsuit against RMF remains viable despite the bankruptcy proceedings, with New Jersey state law applying to the insurance policies involved.