AgentMortgage

Timing critical to reverse-mortgage lender’s exit

Seattle Mortgage settles class-action lawsuit as BofA also leaves market
Published on Mar 9, 2011

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...

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