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HUD’s now suing Wells Fargo & Fannie Mae for their foreclosing on reverse mortgage borrowers. Did HUD open Pandora’s box with their recent mortgagee letter? It seems the entire house of our industry is undergoing a remodel.
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HUD Mortgagee Letter 2008-38 has absolutely nothing to do with this case.
This case is all about a servicer and note owner allegedly acting in bad faith. The underlying mortgage by its very terms allowed the borrower/heirs to pay the lesser of the balance due or 95% of appraised value at time of termination. There is no way under the sun that a Mortgagee Letter can overturn that provision. The respondents are accused of putting their interests above that of the plaintiff.
Good points. The servicer and note owners are the ones who made the decision to ultimately begin foreclosure but was HUDs mortgagee letter seen by the plaintiff’s attorneys as back-peddling? Hard to say. This case opens up a plethora of issues that need to be addressed.