DOJ Trial Date Against Reverse Mortgage Lender Postponed To 2024 And More News

Published by
Peter Kavinsky

A lawsuit related to a U.S. Department of Justice (DOJ) complaint against a reverse mortgage lender, originally due to go to trial next year, has been pushed back to 2024, with both parties citing problems in the discovery process caused by COVID-19. 19 pandemic, as well as other logistical barriers to accessing relevant case data, according to court documents obtained by RMD.

In late 2020, the Department of Justice filed a lawsuit alleging that reverse mortgage company Nutter Home Loans forged certificates and used unqualified underwriters to approve Federal Housing Administration (FHA) backed home equity conversion loans (HECM) loans that were issued in period from 2008 to 2010. the case was suspended administratively to allow both parties to collect the necessary documents and information on the case.

Previous petitions, pause due to COVID

The original DOJ complaint was filed in September 2020 under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and the False Claims Act (FCA) following an investigation by the DOJ Commercial Litigation Division. Civil Division, U.S. Attorney’s Office for the District of Columbia, HUD, and HUD’s Office of Inspector General (OIG).

Reviewing the progress of the complaint in late 2020, RMD learned that the seat of the case had been changed from the District of Columbia to Missouri Western District Court, and Nutter’s attorneys have since filed a motion to dismiss the case. However, this motion was denied, and Presiding Judge Roseanne A. Ketchmark proposed a lengthy planning process, starting with the April 2021 opening and ending with a jury trial due to begin on August 21, 2023.

However, according to attorneys for the Justice Department and Nutter Home Loans, the COVID-19 pandemic and concerns about both parties being out of date required additional delays.

“The reason for the delay and our request for an extension has a lot to do with what has been happening over the last two years with COVID and outages,” said Christopher R.B. Reimer, attorney for the Justice Department’s civilian division, at a hearing earlier this year. . “Many of these documents, based on the age of this case, are paper documents, and from the government’s point of view, many of these paper documents are stored away from the office in large archives. […]. So it took us some time to start this process.”

At the time of the hearing, most of the paper documents wanted by the government had been found, and it was expected that lifting the lockdown orders and travel restrictions would help make the discovery process much easier in the future, he explained. Nutter’s lawyers largely agreed.

“We don’t agree with the complexities that Mr. Reimer has identified,” said Kelly S. Barnaby, an attorney who spoke on Nutter’s defense team. “This case also belongs to an earlier time period, so even in electronic form it included access to data that is not in such an accessible state as more recent data. So it’s just that there have been additional complexities, and I think the parties are working productively to move forward, especially now that some of those obstacles have been overcome.”

New dates in court, history

A day after the hearing, Judge Ketchmark granted the requested motions to adjust the time limit for the case and “close” it for administrative purposes related to automatic time limits. Pre-trial hearings will now take place in February and March 2024, with a jury trial due to begin on March 11. The opening is now set to take place on November 18, 2022, seven months behind the previous opening deadline.

All documents filed with the court after this decision were procedural in nature, according to documents examined by RMD. Last year, Nutter sought to illustrate that the provision regarding disclosure of information within government should not be allowed, arguing that the process – if there is one – for sharing information within government is unsound and could give the government an unfair advantage in this matter.

“After considering the arguments of the parties and balancing the declared interests, the Court concludes that, at this stage, the wording proposed by the Government, which allows intrastate exchange of information, is justified,” the judge ruled. Ketchmark in September 2021.

The allegations, if true, would harm the financial viability of the Mutual Mortgage Insurance Fund (MMI) HECM program, and this action shows that the federal government takes any threat to the integrity of the HECM program seriously, according to HUD. Inspector General Ray Oliver Davis.

“Lenders who willfully ignore FHA requirements for HECM loans are exposing the program to significant financial losses that threaten the future accessibility of this important senior program,” Davis said after filing an initial complaint in late 2020. “This complaint demonstrates that we will relentlessly investigate allegations of abuse of the HECM program by FHA creditors.”

According to legal counsel for Nutter Home Loans, the government’s complaint represents “an illegitimate attempt by HUD to rewrite and reformulate its own ambiguous and patchwork rules ten years after the fact,” according to Edward T. Kang, a DC partner. the office of Alston & Bird LLP, which is defending the company in this case.

“Getting a hearing would allow the government to pursue improper windfalls and recover losses on insurance claims on loans that the Company duly provided to borrowers who were and were eligible for the HECM program,” Kang told RMD in a 2021 statement.

Kang’s later statement indicated that the company was looking forward to proving its case.

“The company looks forward to presenting facts that demonstrate that the allegations in the complaint are inaccurate and that the government cannot meet its burden of proof,” Kang said in an RMD statement shortly after the dismissal motion was dismissed.

In December 2020, about a month before President Joe Biden’s inauguration, then HUD Secretary Dr. Ben Carson and then HUD Chief Financial Officer (CFO) Irv Dennis, in consultation with HUD’s OIG, released a report citing the government’s case. v. Nutter Home Loans and another case against another HECM lender as evidence of its commitment to performance.

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