Class Action Lawsuit Filed Against Wells Fargo and Fannie Mae Over Reverse Mortgages

When an older couple takes out a reverse mortgage on a property and the individual holding the mortgage dies, the surviving spouse has the option of purchasing the property at the current market value.  It is this caveat in reverse mortgages tha has led major lenders to get out of the reverse mortgage business.  Fannie Mae and Wells Fargo, however, have supposedly found a solution: don’t tell the surviving spouse about the option, require the reverse mortgage note to be paid in full and then foreclose on the property.  Now the two lenders are facing a class action lawsuit filed in San Francisco federal court on behalf of reverse mortgage borrowers and their survivors.  The lawsuit alleges that Wells Fargo Bank and Fannie Mae failed to allow the surviving spouses and heirs of reverse mortgage borrowers the right to purchase the property for its appraised value after the loan became due and payable, either due to the death of the borrower or for some other reason.  The plaintiff representative is Robert Chandler of Elk Grove, CA, whose mother, Rosemary, died in 2010, five years after obtaining a reverse mortgage.  Like many other heirs, Chandler was never given notice of his right to purchase the property for its current value.  When Chandler expressed an interest in purchasing the property at that price, Wells Fargo told him that he would have to pay off the full mortgage balance.  This is contrary to the explicit terms of the contract his mother signed with Wells Fargo and federal reverse mortgage law.   Wells Fargo, acting on behalf of the owner of the mortgage, Fannie Mae, then proceeded to foreclose on the Chandler home.  Finding no one willing to buy it for the same market price that Chandler was willing to pay, Fannie Mae then began efforts to evict Chandler from the property, which his family has owned since the 1940’s.  The class action seeks to ensure that any heir of a reverse mortgage borrower who wants to purchase their family home, as Chandler does, will be able to do so.  The attorneys at Balkan & Patterson, LLP are experienced in class action litigation and will act to protect consumers against corporate wrongdoers. If you believe you have potential for a class action, please contact us immediately and we will review your case at no charge.

The law firm of Balkan & Patterson, LLP was founded in 2006 and is headquartered in Boca Raton, Florida, at 601 S. Federal Highway, Suite 302, with offices in Broward County. Mr. Balkan and Mr. Patterson can be contacted at (561) 750-9191. Additional information about Balkan & Patterson, LLP may be obtained from the firm’s website at www.balkanpatterson.com.