AARP joins reverse-mortgage lawsuit, judge limits discovery

AARP Foundation joined a reverse mortgage case last week as the plaintiffs renewed their efforts to obtain class certification and a judge upheld one request for discovery while limiting others.

The federal court case alleges that subservicer Compu-Link Corp., doing business as Celink, and the bankrupt Reverse Mortgage Funding charged borrowers fees that were "unlawful."

"Protecting the home equity of vulnerable older homeowners from deceptive and unfair practices is one of AARP Foundation's strategic priorities," said Willliam Alvarado Rivera, its senior vice president of litigation, in a press release.

The participation of an arm of the high-profile senior advocacy organization in the case could give plaintiffs more momentum, adding to private legal pressure on a part of the mortgage business that's also under renewed public scrutiny. 

However, the judge involved in the Eastern District of New York lawsuit appears intent on putting some limits on plaintiffs in the litigation.

Most recently, Judge Joanna Seybert denied plaintiffs' motion for discovery related to some fee data and granted a motion to seal a document, while simultaneously ordering defendants to produce certain fee codes by early next year, according to court documents.

The lawsuit has been complicated by RMF's bankruptcy and the battle over discovery since plaintiffs filed it in 2022. Plaintiffs in the lawsuit are Sheila Dancy-Wilkins and her power of attorney for mother Flora Mayweathers, a senior borrower who was suffering from dementia.

Circumstances leading to the lawsuit included an allegedly improper foreclosure filing related to a tax default, according to court documents.

"The foreclosure was eventually dismissed, but not before the allegedly unlawful fees were added to the plaintiffs' reverse mortgage loan," the AARP said in the press release. "The complaint alleges that the companies continue to charge extra interest and fees."

Rosicki, Rosicki & Associates, which was part of a multimillion-dollar settlement with several federal entities over allegations of improper foreclosure and eviction related charges in 2018, handled the loan involved. The issues in the case date back to 2017.

Plaintiffs allege there were $10,700 in improper charges in the form of interest, insurance and over fees associated with the Home Equity Conversion Mortgage, a loan designed to help seniors withdraw equity and live in their home so long as they can maintain the property.

Other specific allegations include a lack of pre-filing notifications associated with foreclosures under New York law, and appraisal charges in violation of a right to have the cost paid from proceeds of the property's sale. The lawsuit also challenges fees for property preservation and inspections, alleging that all of the aforementioned charges violated federal rules.

"U.S. Department of Housing and Urban Development regulations further prohibit adding specific foreclosure-related fees to borrowers' HECM loan balances, including unreasonable attorney and trustee fees, fees for appraisals done after loans are declared due and payable, and unnecessary inspection fees when the home is still occupied by borrowers," the AARP said.

An attorney identified as Celink's legal representative in court documents had not responded to a request for comment at deadline. RMF's representative could not be reached for comment at the time of this writing.