oversight

Final Civil Action - MetLife Home Loans, LLC, and a Borrower's Son Settled Allegations of Failing to Comply with HUD's Federal Housing Administration HECM Loan Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2018-03-23.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                               U.S. DEPARTMENT OF
                               HOUSING AND URBAN DEVELOPMENT
                                        OFFICE OF INSPECTOR GENERAL




                                             March 23, 2018
                                                                                            MEMORANDUM NO:
                                                                                            2018-CF-1801



Memorandum
TO:            Dane M. Narode
               Associate General Counsel, Office of Program Enforcement, CACC

               //signed//
FROM:          Christeen Thomas
               Director, Joint Civil Fraud Division, GAW

SUBJECT:       Final Civil Action: MetLife Home Loans, LLC, and a Borrower’s Son Settled
               Allegations of Failing To Comply With HUD’s Federal Housing Administration
               HECM Loan Requirements


                                          INTRODUCTION

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General
(OIG), conducted a review of a Federal Housing Administration (FHA) home equity conversion
mortgage (HECM) underwritten by MetLife Home Loans, LLC. MetLife is an FHA-approved
mortgage lender with its principal place of business located in Irving, TX.

                                           BACKGROUND

The Housing and Community Development Act of 1987 (Public Law 100-242, February 5,
1988) established a Federal mortgage insurance program, Section 255 of the National Housing
Act, to insure HECMs (also known as reverse mortgages). The program is administered by
HUD. The HECM program is a mortgage insurance program that allows borrowers to convert
equity in their homes into a monthly stream of income. All HECM borrowers must be at least 62
years of age, occupy the property as a principal residence, have financial resources to continue to
make timely payment of ongoing property charges, and have participated in a consumer
information session given by an FHA-approved HECM counselor. Reverse mortgages can
provide a valuable financing alternative for qualified homeowners.




                                                    Joint Civil Fraud Division
                                    400 State Avenue, Suite 501, Kansas City, KS 66101
                               Visit the Office of Inspector General website at www.hudoig.gov.
The mortgage loan application may be executed on behalf of a borrower by an “agent” or
“attorney in fact” holding a durable power of attorney, specifically designed to survive
incapacity and avoid the need for court proceedings. Powers of attorney (durable or otherwise)
may be used in closing documents. Any power of attorney must comply with State law and
allow for the note to be legally enforced in that jurisdiction.

                                   RESULTS OF INVESTIGATION

On June 9, 2017, HUD notified MetLife and the borrower’s son of their potential liability under
the Program Fraud Civil Remedies Act of 1986, 38 U.S.C. (United States Code) 3801-3812, 1 for
causing a false claim to be made regarding the eligibility of an FHA HECM loan. MetLife
underwrote the loan and failed to ensure that the signatories to the loan had the legal authority to
execute it. Specifically, the power of attorney through which the borrower’s son executed the
loan required his sister’s signature as well as his own.

On November 3, 2017, MetLife entered into a settlement agreement to pay HUD $4,000 upon
execution of the agreement. In addition, MetLife will indemnify and hold HUD harmless for any
and all losses HUD incurs or has incurred in connection with the loan. 2 On August 15, 2017, the
borrower’s son entered into a settlement agreement to pay HUD $1,500. The settlements do not
constitute an admission of liability or fault by any of the parties.

                                          RECOMMENDATION

We recommend that HUD’s Office of General Counsel, Office of Program Enforcement,

1A.     Acknowledge that the attached settlement agreement for $4,000 represents an amount
        due HUD from MetLife.

        As of November 3, 2017, the settlement amount due HUD of $4,000 had been paid in
        full. Therefore, no further action is required by the Office of General Counsel. At
        issuance of this memorandum, HUD OIG will enter a management decision into HUD’s
        Audit Resolution and Corrective Action Tracking System, along with the supporting
        payment information, to show that final action was completed.

1B.     Enforce the indemnification agreement in the attached settlement agreement to prevent an
        estimated $95,769 3 loss to HUD. This represents an amount due HUD from MetLife for
        indemnifying and holding HUD harmless for any and all losses HUD incurs or has
        incurred in connection with FHA loan number 137-4740973.


1
  The Program Fraud Civil Remedies Act establishes remedies for false statements and false claims valued at
   $150,000 or less that are submitted to the Federal Government or intermediaries of the Government.
2
  MetLife will pay HUD the amount of HUD’s investment minus HUD’s recovery. HUD’s investment is the total
   amount of all insurance claims paid (currently $195,446) plus all expenses incurred by HUD in conjunction with
   possession and disposition. HUD’s recovery is the net proceeds HUD receives upon sale of the assigned
   mortgage or upon sale of the real property acquired through foreclosure of the assigned mortgage.
3
  We applied FHA’s average loss experience as of September 30, 2017, that was provided by HUD. We calculated
   the savings value at $95,769, which is 49 percent of the total claim paid by HUD of $195,446.

                                                        2
1C.   Acknowledge that the attached settlement agreement for $1,500 represents an amount
      due HUD from the borrower’s son.

      As of August 15, 2017, the settlement agreement of $1,500 had been reached, and it
      represents an amount due HUD. Included in the settlement agreement is a repayment
      agreement that provides for an initial payment of $500 and 10 monthly payments of
      $100. The final payment is expected by June 1, 2018. In accordance with HUD
      Handbook 2000.06, REV-4, the final action target date will be set at July 1, 2018 (30
      days from the final date on which payment is expected). At issuance of this
      memorandum, HUD OIG will enter a management decision into HUD’s Audit Resolution
      and Corrective Action Tracking System, along with any supporting payment information
      received to date.




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