Reality Check: One woman's reverse mortgage horror story
MOBILE, Ala. (WPMI) —
You've probably seen ads for reverse mortgages and maybe even thought about getting one yourself. It's a popular option for seniors who use the equity in their home to get cash. In this Reality Check, Local 15's Andrea Ramey shares one woman's horror story you need to hear before you or someone you know signs on the dotted line.
Ad, after ad, pitch reverse mortgages to seniors. Charlotte Kibby wishes she'd never seen a single one because it almost cost her her home. Charlotte and her late husband Don took out a reverse mortgage with Reverse Mortgage Solutions in 2009 when the couple fell on hard times. Their restaurant next door was struggling and soon Don got sick.
"We thought it would be a way to get some money, get out of the bind and still keep the house," said Kibby.
Not long after Don passed away, her troubles with the Reverse Mortgage Solutions began.
"I got a notice from them that I was in default, that I wasn't living there," said Kibby.
Living in the home is required. Kibby had sent the company her occupancy certifications she'd signed, and thought things were fine. Her life was turned upside down January 2014 when a foreclosure notice for her home was advertised in the paper.
"It's a bad stress. My hair's fallen out," said Kibby. "Sometimes I could go two and three days, I couldn't keep even water down."
Kibby called the company after she saw the notice in the paper. This is an excerpt of the conversation:
"I need to find out why my house is in foreclosure!" said Kibby.
"I will advise you Ms. Kibby that the loan is in foreclosure because it is coming up as the property is not occupied," said a Reverse Mortgage Solutions representative.
"Are you still living in the property 6124?" asked the representative.
"Yes! Right." replied Kibby.
"We won't worry with that because we can get it fixed," the representative assured her. "We'll get this straightened out for you Ms. Kibby."
Two days later, her house was sold on the courthouse steps.
"They treated me like I was nothing, you know, like I didn't matter," said Kibby.
The mistake that started this whole nightmare? The company did what's called a drive-by inspection to make sure the home was occupied. But instead of inspecting Ms. Kibby's home, the vacant restaurant next door was inspected.
Records show the vacant restaurant was inspected 19 times, instead of Kibby's actual home.
"Who'd be living inside of a restaurant?" said Kibby.
Not only did the company foreclose on Kibby, they then sued her to vacate. A terribly upsetting irony given the reason for default was her not living in the home.
"They treated her like she was a stupid old person," said attorney Robert Hedge.
At her wits end and afraid she was about to lose her home of almost 50 years, she hired attorney Robert Hedge.
"Time is money. So the quicker they foreclose, the quicker they get paid back. It's all a money game," said Hedge.
The BBB says Reverse Mortgage Solutions had 47 complaints filed against them in the past year. Customer feedback on the BBB's website is 100% negative. In December, it was one of three companies fined by the Consumer Financial Protection Bureau for deceptive ad practices. CFBP said it misrepresented to seniors that they couldn't lose their homes.
"They foreclose on 300-400 homes a month," said Hedge.
Last month, Kibby's case went before a jury. The 72-year-old widow was determined not to settle and rejected offer after offer from the company.
"It wasn't about the money. It was about my house and maybe stopping them from doing this to somebody else," said Kibby.
Her determination paid off. The jury returned a $2 million verdict against Reverse Mortgage Solutions.
"It breaks your heart because you think who else are they doing this to besides you?" said Kibby.
We contacted Reverse Mortgage Solutions. A company spokesperson said in an email, ”RMS makes every effort to comply with all applicable laws and other requirements in its reverse mortgage servicing business, and continually strives to improve its internal processes. For customer privacy reasons, we are unable to comment about the specifics of any particular borrower’s loan.”