The Office of the Inspector General (OIG) found Bank of America’s HECM Servicing Division to be out of compliance. The OIG alleged that Bank of America did not comply with two important HUD requirements in its servicing of reverse mortgages. It did not maintain the annual certifications of the borrower’s residency, and it failed to notify HUD in a timely manner when the reverse mortgages became due and payable as a result of the death of the borrower. One reverse mortgage loan file also did not contain an appraisal.
Bank of America disputes the findings of the OIG. Their main objection appears to be that many of the loans in question were not being serviced by Bank of America when the loan was completed or when the borrower passed away, and rather are files that have since been acquired by Bank of America when Bank of America acquired the Seattle Mortgage Company in April 2007. The OIG responded that the acquiring servicer is responsible for receiving the complete file from the prior servicer. Another Bank of America objection is that many of the certificates of occupancy could be found through online methods, while the OIG only reviewed the hard copy files. The OIG responded that while there was a written procedure, it did not appear to always be followed, and the occupancy certificates need to be retained.
A complete copy of the report, including Bank of America’s response, can be found below: