Reverse Mortgage Violation? Not So Fast 

April, 2020 - Nicholas P. Mooney II

A West Virginia federal district court recently addressed a plaintiff’s claims that her reverse mortgage violated at least two statutes and West Virginia common law.

The plaintiff was one of two borrowers on that mortgage and sued the mortgage lender and its servicing affiliate. The servicer moved to dismiss. The court granted the motion in part and denied it in part. The court granted the motion and dismissed the plaintiff’s claims to the extent that they (1) alleged fees that were charged at the loan closing violated West Virginia law and (2) alleged a breach of contract claim. The court denied the motion to the extent that it argued the servicer wasn’t a debt collector under West Virginia law.

You can find a copy of the court’s decision here – Woods v. Reverse Mortgage USA.

This decision is important for a number of reasons…..

  • First, there is little authority thus far from courts interpreting West Virginia’s Reverse Mortgage Enabling Act (in Chapter 47, Article 24 of the West Virginia Code).

  • Second, the court expressly found no private right of action exists under this Act and dismissed plaintiff’s claim under it.

  • Third, the court also dismissed plaintiff’s claims based on the fees charged at the loan closing by noting the fees were apparent on the face of the loan documents and, despite her claim that she only learned the fees were “illegal” several years after the loan closing, nothing prevented plaintiff from exercising reasonable diligence and learning about the fees years before.

If you have any questions, please feel free to contact us.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         


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