Foreclosed on, Irregularly, After 74 Years

     MINNEAPOLIS (CN) – An elderly, disabled woman lost to an illegal foreclosure the home she has lived in for 74 years, after Reverse Mortgage Solutions and Fannie Mae “accelerated” her loan balance, she claims in court.
     Patricia A. Witte sued Reverse Mortgage Solutions, a Delaware corporation based in Texas, and the Federal National Mortgage Association, on July 15 in Hennepin County Court.
     In the lawsuit, Witte says her parents bought the home in 1939, and she has lived there her entire life. As a child she contracted Guillain-Barre Syndrome and has been disabled for most of her life, making it impossible to work due to the disability. Her parents used the home to care for her, and lived there until their own deaths.
     When Witte inherited the home it was free from any mortgages or other liens, but it the home needed repairs, according to the complaint.
     “Ms. Witte received only Social Security income at the time – between $400 and $500 per month. She could not qualify for any other kind of loan besides a reverse mortgage loan,” according to the complaint.
     A reverse mortgage is generally available to borrowers age 62 or older who have sufficient equity in their homes. “In other words, reverse mortgage loans allow property-rich but income-poor borrowers [to] maintain homeownership by pledging their homes as collateral for loans that need not be repaid until they die, sell, or move,” the lawsuit states.
     Reverse mortgages may require borrowers to pay property charges, such as real estate taxes, hazard insurance premiums and utility bills. If a homeowner fails to pay a property charge, the lender may have the option to foreclose the property. However, federal policies provide limitations on the use of foreclosure as a remedy for minor defaults such as the nonpayment of property charges.
     Witte says that in 2005 she applied for a federally insured reverse mortgage through Homestead Mortgage, secured by a first-place mortgage on the loan.
     “The mortgage loan proceeds left Ms. Witte with $15,000 to make the needed repairs, which she used for that purpose, and a $37,000 line of credit. The loan cost more than $12,000 in origination fees and closing costs. The mortgage secured the balance of the loan, including the line of credit, up to $160,500,” the complaint states.
     It adds: “Ms Witte understood that by agreeing to the loan, she gave up some of the equity in her home. But she also understood that so long as she lived in the home and did not attempt to sell it, she would never have to repay the loan as long as she lived.”
     After closing, Homestead Mortgage Corp. assigned the mortgage to Seattle Mortgage Corp., which assigned it to Bank of America, according to the complaint.
     For more than five years after closing, Witte says, she managed the home on her own. But in 2009 she fell behind her payments, including property tax payments. “She knew that the process for dealing with property tax delinquencies moved slowly and included many safeguards for homeowners. She thought that someone from the county would contact her to set up a repayment plan” the complaint states.
     But no. Bank of America paid the taxes and added the amount to the balance of mortgage loan, but failed to tell Witte that she had to pay back the amounts it paid on her behalf, according to the complaint.
     After paying the property taxes again in 2010 and 2011, Bank of America finally notified Witte about the property tax issue, stating that she owed $4,459.85, the complaint states.
     In March 2012, Bank of America assigned the mortgage to Reverse Mortgage Solutions.
     “In July 2012, Reverse Mortgage Solutions sent Ms. Witte a notice stating that she owed $5,664.83 for unpaid real estate taxes,” the complaint states. “Reverse Mortgage Solutions did nothing else toward resolving the unpaid taxes. It did not contact her by telephone or attempt to resolve the problem in any other way. Instead, five weeks later, Reverse Mortgage accelerated Ms. Witte’s loan balance. It sent Ms. Witte a letter saying that she owed $89,847.14.”
     In February 2013, Reverse Mortgage Solutions served Witte with a notice of mortgage foreclosure sale, claiming she owed $66,296.
     Witte says the foreclosure notice significantly understated the default amount; that the “Help for Homeowners” notice failed to name the correct lender, and stated an incorrect reinstatement figure.
     Witte tried to save her home from foreclosure.
     “She sought to delay the foreclosure sale as long as she could, but could not understand what she needed to do,” the complaint states. “A family member paid property taxes to Hennepin County, but the County sent her a notice stating that her property taxes had already been paid by Reverse Mortgage Solutions.”
     In March this year Reverse Mortgage Solutions purchased the home in a sheriff’s sale and sold it to Fannie Mae in April. The lawsuit does not state the terms of either sale.
     Witte then sought reasonable accommodation from Reverse Mortgage Solutions and Fannie Mae that would allow her to stay in her home. But Fannie Mae denied Witte’s request and started an eviction action.
     The complaint states: “Ms. Witte does not have another place to live. Her low monthly income makes it impossible for her to find an apartment she can afford. Her brother – the only family she has – recently broke his hip and has only a small apartment himself. If forced to leave her home, Ms. Witte will have no choice except to move into a homeless shelter, if she can find one.”
     Witte seeks declaratory judgment and actual, incidental and consequential damages for violations of the Minnesota Residential Mortgage Originator and Servicer Licensing Act and other laws, including the Minnesota Human Rights Act, and she wants the sheriff’s sale declared invalid.
     She is represented by Luke Grundman with Mid-Minnesota Legal Aid.

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