Celink Agrees To Pay $4.25 Million To Resolve Its Alleged Liability Relating To Its Servicing Of Federally Insured Reverse Mortgages
Fort Myers, FL – United States Attorney Maria Chapa Lopez announces that Compu-Link Corporation (Celink) has agreed to a civil settlement that will pay $4.25 million to the United States to resolve allegations that it violated the False Claims Act in connection with its participation in a federally insured Home Equity Conversion Mortgage (HECM) or “reverse mortgage” program.
Through reverse mortgage loans, older people are able to access the equity in their homes by borrowing money against the equity they have built in their homes. Reverse mortgages insured by the federal government are called Home Equity Conversion Mortgages (“HECMs”), and are only available through a Federal Housing Administration (“FHA”)-approved lender.
To encourage reverse mortgage loans, the FHA protects lenders from loss by providing mortgage insurance. Under FHA’s program, a loan becomes due and payable when the home is sold or vacant for more than 12 months, or upon the death of the homeowner, whichever comes first. The lender is then repaid the amount of the loan, including the costs of servicing the loan and any interest that accrues on lender expenses after a loan becomes due and payable. FHA will reimburse a lender that is unable to recoup the full amount of the loan. In order to claim recoupment, the servicer is required to meet a number of regulatory requirements and deadlines.
Celink is a Michigan corporation in the business of servicing HECM loans nationwide on behalf of reverse mortgage loan owners. The United States alleged that Celink obtained insurance payments for interest from FHA despite failing to disclose on the insurance claim forms that the mortgagee was not eligible for such interest payments because it had failed to meet deadlines relating to obtaining an appraisal of the property, commencing foreclosure proceedings, and/or exercising reasonable diligence in prosecuting the foreclosure proceedings to completion. As a result, between November 1, 2011, and May 1, 2016, the mortgagees on the relevant reverse mortgage loans serviced by Celink allegedly obtained additional interest that they were not entitled to receive.
“This settlement represents our office’s continued commitment to protecting the financial solvency of vital financial programs designed to benefit America’s seniors,” said United States Attorney Chapa Lopez. “HECM servicers must be held accountable for failing to adhere to FHA requirements that are designed to ensure the continued viability of the HECM program. We are pleased that Celink cooperated with the investigation and agreed to accept financial responsibility for these failures.”
“This investigation and settlement should serve as a stark reminder of our ongoing efforts to ensure that our mortgage industry partners adhere to mutually agreed upon program rules and business practices which help mitigate financial risk associated with FHA programs,” said Wyatt Achord, Acting Special Agent in Charge, U.S. Department of Housing and Urban Development, Office of Inspector General. “It is our mission to rigorously pursue cases such as this one to protect the integrity of federal housing programs designed to assist homeownership.”
This investigation is another example of the United States Attorney’s Office’s efforts to combat fraud in the reverse mortgage industry. In September of 2015, the Middle District of Florida, in conjunction with the Department of Justice, announced a $29.63 million settlement with Reverse Mortgage Solutions, a subsidiary of the Tampa based Walter Investment Management Corporation, to resolve allegations relating to its failure to adhere to FHA regulations in servicing HECM loans. Similarly, in May 2017, an $89 million settlement was reached with Financial Freedom relating to HECM servicing violations.
The investigation was handled by Assistant U.S. Attorney Kyle S. Cohen, with assistance from the United States Department of Housing and Urban Development Office of Inspector General.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.