Friday’s Food for Thought: Pandora’s Box

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HUD’s now suing Wells Fargo & Fannie Mae for their foreclosing on reverse mortgage borrowers. Did HUD open Pandora’s box with their recent mortgagee letter? It seems the entire house of our industry is undergoing a remodel.


The_Cynic August 13, 2011 at 10:53 am

HUD Mortgagee Letter 2008-38 has absolutely nothing to do with this case.

This case is all about a servicer and note owner allegedly acting in bad faith. The underlying mortgage by its very terms allowed the borrower/heirs to pay the lesser of the balance due or 95% of appraised value at time of termination. There is no way under the sun that a Mortgagee Letter can overturn that provision. The respondents are accused of putting their interests above that of the plaintiff.

admin August 15, 2011 at 7:26 am

Good points. The servicer and note owners are the ones who made the decision to ultimately begin foreclosure but was HUDs mortgagee letter seen by the plaintiff’s attorneys as back-peddling? Hard to say. This case opens up a plethora of issues that need to be addressed.


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