AgentMortgage

Timing critical to reverse-mortgage lender’s exit

Seattle Mortgage settles class-action lawsuit as BofA also leaves market

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The surprising decision for Seattle Mortgage Co. to exit the reverse mortgage market apparently had more to do with timing than the ramifications of a class-action lawsuit or a lack of belief in the senior financing option. SMC, a prominent and respected player in the national reverse-mortgage industry for years, was hit with a class-action lawsuit brought by Mary Labrador, a San Francisco resident.While the company contends it did nothing wrong and worked within federal guidelines that govern FHA-insured Home Equity Conversion Mortgages (HECMs), it chose to settle the case rather than spend money to fight it. A reverse mortgage historically has enabled senior homeowners to convert part of the equity in their homes into tax-free funds without having to sell the home, give up title, or take on a new monthly mortgage payment.Reverse mortgages are available to individuals 62 and up who own their home. The maximum amount of funds received is based on age, current interest ra...