California Reinvestment Coalition Calls for Moratorium on Reverse Mortgage Foreclosures by CIT Group
April 27, 2016- San Francisco: Earlier today, the California Reinvestment Coalition called on the Department of Housing and Urban Development (HUD) to impose a moratorium on any additional reverse mortgage foreclosures by CIT Group and its subsidiary, Financial Freedom. The call for a moratorium is based in part on new data (see fact sheet here) that CRC obtained from HUD, indicating that Financial Freedom/CIT Group’s share of reverse mortgage foreclosures (39%) since April 2009 is more than two times greater than the company’s estimated market share (17%).
Kevin Stein, associate director at the California Reinvestment Coalition, comments: “CRC was contacted by a number of widowed homeowners and other heirs who shared disturbing stories about Financial Freedom. Using a FOIA request, we asked Financial Freedom’s primary regulator, HUD, about the total number of foreclosures it had completed, and the number of complaints HUD had received against Financial Freedom.”
Stein adds: “The data HUD provided is a red flag that something is amiss at Financial Freedom. While the company services an estimated 17% of the reverse mortgage market, data from HUD indicates that Financial Freedom was responsible for 39% of the 41,237 HECM reverse mortgage foreclosures that occurred since April 2009. This builds on the troubling consumer stories shared with us about Financial Freedom and CIT Group disclosing it had received subpoenas about Financial Freedom from HUD’s OIG.”
“This newly uncovered data about Financial Freedom’s outsized role in HECM foreclosures is troubling, and suggests the need for a thorough and transparent investigation,” comments Maeve Elise Brown, executive director at Housing and Economic Rights Advocates.
HUD declined to fully answer CRC’s FOIA request, which also asked for other information, including the number of complaints made against Financial Freedom, because HUD estimated it would take 120 years for the regulator to compile the information.
Stein comments: “It’s deeply concerning from a consumer protection standpoint when the main regulator for an industry tells you that because of their outdated technology, it will take them 120 years to compile complaint data about one of the companies they’re supposed be regulating. If HUD lacks the ability to systematically access, analyze, and respond to consumer complaint data, how can it effectively regulate this industry, and individual companies? This is important information for identifying problematic practices and bad actors. In comparison, anybody with an internet connection can use the CFPB’s complaint database, and the CFPB routinely publishes public reports about the complaints it receives.”
CRC will be releasing an additional fact sheet next week about additional data it received in the FOIA request about HUD’s new policy to protect non-borrowing, widowed spouses who would otherwise be facing foreclosure.