Ian Gallo - CLE Reverse Mortgage123.pptx

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1. Reverse mortgages Stay in your house for the rest of your life? Not so fast!

2. Course description 2 Reverse Mortgage holders often times file foreclosure actions without any basis to support the actions. … We will examine the problematic determinations by the Reverse Mortgage servicers of non-occupancy by Borrowers and provide guidance for attorneys to properly litigate these actions for their clients. You will be provided valuable insight as to how to effectively and powerfully handle these cases for you clients from inception to trial.

3. 1,105,654 Number of Reverse Mortgages Originated Since 2005 in the USA 3

4. Reverse Mortgages vs. conventional loans 4 Reverse Mortgage Must be 62 or older Own the home No monthly loan payments Lump sum payment / Draws Primary residence Continual occupancy Conventional Loans No age requirements Typically used to fund purchase Monthly loan payments Does not need to be primary residence

5. Bases of default No longer occupying the property as the primary residence; Inability or unwillingness to maintain the property; Failure to make T&I payments as they come due; or The last surviving borrower dies or sells the property. Changes enacted in 2015 to the HUD Model Loan Documents Borrower shall complete and provide to the Lender on an annual basis a certification, in a form prescribed by the Lender, stating whether the Property remains the Borrower’s Principal Residence and, if applicable, the Principal Residence of his or her Non-Borrowing Spouse. 5

6. Occupancy Determinations Pre-2015 6

7. How is occupancy determined? Annual Certificate of Occupancy What constitutes non-occupancy? The servicers dictate the rules. No contractual obligation that a borrower must certify – in writing – that he or she occupies his or her home. How does the servicer resolve occupancy issues? By filing foreclosure of course. Isn’t personal service at the Property sufficient to dismiss the action? You’d think so but sadly you’d be wrong. Is an Occupancy Certificate a requirement? Nope. But surely the servicers will state otherwise. What damages stem from improper declaration of default? Increases to the UPB; non-economic damages; and punitive damages. 7

8. DON’T LOSE SIGHT OF THE ULTIMATE GOAL Remember - your main objective is to ensure your client will not be foreclosed upon…everything else is a bonus 8

9. Litigation of Improper Non-Occupancy Foreclosure Actions From Counterclaims to Trial 9

10. First Half of Litigation 1 2 3 Counterclaims Discovery Depositions 10

11. Where to Start? SLIDE OPTION #2 11 1 3 5 6 4 2 Counterclaims Depositions Trial Discovery Dispositive Motions Appeal if necessary

12. “Plaintiff’s actions will - time and time again - betray its words.” 12

13. Motions Practice 13 Motion for Summary Judgment Seek SJ as to the underlying action If you have made out your counterclaims - file SJ on the issue of liability Motions to Compel Be prepared to fight to get discovery documents and responses Issue Notices of Depositions right out-the-gate

14. Trial If possible - sever the foreclosure action from the counterclaims 14

15. TRIAL PREP Witnesses Borrower Process Server Property Inspector Corporate Designee Using their witnesses against them Never ask a question you don’t know the answer to Simplifying the case Remember - they brought about this situation by their lack of due diligence 15 Proving damages Use their business records to prove damages

16. The Trend in Reverse Mortgage and advocating for your client Though the 2015 HECM Model Loan Document changes will ultimately be more prevalent in future actions, the older origination loans are still dominating foreclosures. Understand the endgame. Communicate with your client. Remember the vulnerability of the demographic your client falls into. 16

17. Questions? 17