The former reverse mortgage lending unit of failed IndyMac Bank FSB has agreed to a government settlement that will cost it $89 million.
Former IndyMac-subsidiary Financial Freedom Senior Funding Corp. was once one of the largest reverse mortgage originators in the country.
When Pasadena, California-based IndyMac failed in
July 2008, Financial Freedom became the property of OneWest Bank FSB.
Nowadays, CIT Group Inc. owns the business as a result of its August 2015 acquisition of OneWest.
On
Tuesday, the Department of Justice announced that a settlement was reached with Austin, Texas-based Financial Freedom.
The government alleges that Financial Freedom sought to obtain insurance payments for interest on home-equity conversion mortgages from the Federal Housing Administration.
But Financial Freedom, which was the servicer on the loans, allegedly failed to properly disclose on the insurance claim forms that mortgagees were not eligible for such interest payments because they had failed to meet various deadlines. The deadlines were related to property appraisals, submission of claims to the Department of Housing and Urban Development and pursuit of foreclosure proceedings.
“As a result, from March 31, 2011, to Aug. 31, 2016, the mortgagees on the relevant reverse mortgage loans serviced by Financial Freedom allegedly obtained additional interest that they were not entitled to receive,” the announcement stated.
Financial Freedom’s alleged actions violated the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
The agreement will cost Financial Freedom $89 million.
