Skip to Content
We Speak English, Spanish and Farsi 213-344-0043

Sarah Havemeyer of Southampton, N.Y. has been fighting a California bank in court for two years over her late mother’s reverse mortgage, which dates back to 1997.

Havemeyer estimates that the total owed on the reverse mortgage could be in the neighborhood of $1.5 million to $1.6 million. The amount that Havemeyer’s mother actually received from the reverse mortgage between 1997 and her death in 2010 was just $272,911.51. The bank, OneWest, has not yet said what it believes is owed.

The law firm representing the OneWest subsidiary that claims ownership of the reverse mortgage note — Financial Freedom Acquisition – has filed for foreclosure, seeking payment of the $272,911.51, plus “interest at the rate stated” in the mortgage along with legal and other fees.

Challenging the Foreclosure

Havemeyer, serving as executrix of her mother’s estate, is challenging the foreclosure. She claims Financial Freedom has been unable to present documentation proving it owns the mortgage and that the terms of the loan are “unconscionable and usurious” and violate state law.

Special Case

The terms of the mortgage actually make this case quite special – the 50-50 appreciation sharing, plus the mandatory annuity added to the loan balance, plus the 2 percent extra fee tacked on at the end. Even more alarming is that thousands of reverse mortgages marketed in the 1990s employed similar payment terms. Additionally, in the late 1990s, a series of California lawsuits claimed that similar terms amounted to “financial abuse of the elderly” and allowed lenders to “[reap] unfair profits at the expense of the elderly,” many of whom ended up owing far more than they borrowed. A consolidated class-action lawsuit was settled for $8 million. Not one of the companies admitted wrongdoing.

During the mortgage crash OneWest Bank acquired reverse mortgage assets including the loan now in dispute.

Havemeyer’s lawyer in the foreclosure case, Michael Walsh, says, “I can’t imagine that Mrs. Hoge [Havemeyer’s mother] really did understand what she was getting into.”

Today’s Reverse Mortgages Still Harmful for Seniors

Even though today’s friendlier versions of reverse mortgages offer counseling upfrontthey can still be hazardous to elderly borrowers’ financial health and potentially costly for their heirs. Nearly one in 10 federally backed reverse mortgages is in default and risking foreclosure.

Share To: