The Department of Housing and Urban Development is threatening to stop Financial Mortgage USA of Honolulu from making Federal Housing Administration reverse mortgages.
HUD said last week that the mortgage brokerage "duped" seniors into using the proceeds of their FHA reverse mortgages to purchase annuities from an affiliated insurance firm. Reverse mortgages have an annuity feature depending on the payment plan the senior chooses.
The department said its Mortgagee Review Board is "particularly concerned about one case in which the company steered an 88-year-old borrower into purchasing an annuity which did not mature until she reached her 104th birthday." The board has proposed stripping Financial Mortgage USA of its status as a FHA-approved lender and fining the company $97,500 for violating FHA rules.
The lender can request an administrative hearing to contest HUD's actions. Company executives could not be reached for comment.