AARP Foundation Challenges Reverse Mortgage Servicers Over Unlawful Fees

En español | AARP Foundation lawyers have joined a pending class action lawsuit against the country’s largest servicers of reverse mortgages, alleging the companies saddled older borrowers with unlawful fees after improperly foreclosing on their homes.

Reverse mortgages allow older homeowners to convert part of their home equity into cash without having to sell their home or make monthly mortgage payments. Often, they’re sought out by cash-strapped retirees who don’t want to move but need to tap the equity they’ve built in their homes to pay their bills. But reverse mortgages can also be risky. Fees and interest will increase the size of the loan over time, and the loan can come due early if the homeowner stops paying insurance or taxes, or doesn't maintain the property.

The lawsuit was filed in federal court in New York on behalf of Sheila Dancy-Wilkins, her 93-year-old mother, Flora Mayweathers, and similar reverse mortgage borrowers around the country. According to the lawsuit, reverse mortgage servicers Celink and Reverse Mortgage Funding foreclosed on the pair’s home without sending notices required by law. The companies also added prohibited foreclosure-related fees, including for an appraisal, inspections, attorneys fees, insurance premiums and interest that “wrongfully inflated the loan balance every month,” AARP Foundation lawyers argue.

“Older homeowners worked hard to pay their mortgages. When they borrow from their home equity so they can age in place, they deserve fair treatment and protection,” William Alvarado Rivera, senior vice president of litigation for AARP Foundation, said in a statement. “Protecting the home equity of vulnerable older homeowners from deceptive and unfair practices is one of AARP Foundation’s strategic priorities.”

Read more about the lawsuit and find out what else AARP Foundation is doing to protect people 50 and older.