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Monday, July 22, 2024 | Back issues
Courthouse News Service Courthouse News Service

Widowers in Reverse-|Mortgage Case Win Fees

(CN) - The widowed spouses of homeowners who tackled the U.S. government's reverse-mortgage policy deserve $293,000 in attorneys' fees, a federal judge ruled.

Reverse mortgages allow a homeowner to take out a loan against his property's equity, but they are particularly risky for a lender. To ensure that banks keeps make them available to senior citizens, Congress therefore permits the Department of Housing and Urban Development to insure qualifying loans.

Charlie Plunkett and Robert Bennett were both widowed by holders of reverse mortgages, also known as home-equity conversion mortgages, and sued HUD when they faced foreclosure.

U.S. District Judge Ellen Huvelle in Washington had ruled this past August that HUD cannot insure a reverse mortgage that would permit a lending bank to foreclose on a home if the mortgager was survived by a spouse who was not named on the mortgage.

She awarded the widowers $236,000 in attorneys' fees and costs on Monday. They had requested $293,000.

The judge found the department's policy was "not a plausible reading of the statute," and its position was therefore unreasonable.

HUD lost the case "because it failed to provide any persuasive criticism of plaintiffs' straightforward interpretation of the statute," Huvelle said.

In a separate ruling, Huvelle upheld HUD's plans to adopt the loan itself if the loan reached 98 percent to avoid improper foreclosure.

"The court can find nothing in HUD's past briefing in which it represented that the mortgages would be 'not due and payable' rather than 'deferred,'" she wrote. "More to the point, plaintiffs have not explained why this semantic distinction results in any meaningful difference."

HUD clearly told the banks of the plaintiffs that the loans did not become due upon the deaths of their spouses, unless some other triggering effect occurred to make the loans immediately due, according to the ruling.

"The court concludes that plaintiffs have failed to put forward sufficient evidence to prove that defendant engaged in fraud or that there exist extraordinary circumstances that would warrant altering or amending this court's prior judgment," Huvelle said.

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