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Attorney Rashad Blossom Hopes For Amicable End To Reverse Mortgage Fraud Cases

Posted on June 3, 2019 in Rashad Blossom Advice

Rashad Blossom

Rashad Blossom

A reverse mortgage can prove to be an economic lifeline to those in troubled financial waters. When someone promises to throw out that lifeline, but instead reels it in and walks away, homeowners are left floundering. That’s exactly what happened when a Chicago, Illinois mortgage originator allegedly made off with about $7 million in loans from six different lenders. This situation, according to bankruptcy attorney Rashad Blossom, is a tragedy for the victims – many of whom were left facing foreclosure.

According to an April 2019 article from HousingWire.com, “elderly homeowners” from “125 African American families” were victimized in the scam that allegedly saw Mark Steven Diamond take out “reverse mortgages without their knowledge” or misrepresent “the terms of the loan in order to convince them to get one.” Previous reports indicate that the individuals allegedly targeted by Diamond were anywhere from 62 to 97 years old and they were singled out “based on how much equity they had in their homes and whether they were financially sophisticated or not.”

Further complicating this situation is that the homeowners who’ve sought legal protection in the wake of the scam had to file suit against Reverse Mortgage Solutions, which, along with its parent company, Ditech Holding Corporation, are currently in bankruptcy.  Ditech/Reverse Mortgage Solutions, according to another HousingWire.com article, has encountered many problems servicing its reverse mortgage loans, and it is mulling selling off some or all assets.

One legal office working to represent these 125 families is working to argue in court that the victims of fraud need to have their concerns addressed in the companies’ bankruptcy case and that “consumers may be without recourse to appropriately address these errors” should this fail to happen. A committee of creditors has thus been established to help the reverse mortgage borrowers as they battle default and other economic woes of their own. This could be a lose-lose situation for those who initially trusted the Chicago-based mortgage originator, and is worrisome to Rashad Blossom.

As an attorney who assists consumers in fighting off foreclosure and with more than a decade of experience in this sector, Rashad Blossom often helps his clients to avoid losing their homes.  He’s closely following this case for these reasons and hopes for a positive outcome for the affected consumers despite the bankruptcy cases of Ditech and Reverse Mortgage Solutions. “We just want to make sure that the bankruptcy does not do anything that negatively impacts consumer rights,” J. Samuel Tenenbaum, Northwestern’s Complex Civil Litigation and Investor Protection Center director, told HousingWire.com.

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