Champion Mortgage Billing for Unnecessary Inspections, Plaintiff Says

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A Chicago homeowner alleges in a class action lawsuit filed Wednesday that the Champion Mortgage Company, a division of Nationstar Mortgage, unlawfully charges reverse mortgage borrowers for unwarranted property inspections.

Plaintiff Rena Nicholson says Champion Mortgage has been conducting unnecessary property inspections, leaving elderly borrowers stuck with the bill. She says these inspection fees are in violation of federal housing regulations and Champion’s own mortgage agreements.

Champion Mortgage is the business name for the reverse mortgage division of defendant Nationstar Mortage LLC. Texas-based Nationstar is one of the largest mortgage servicers in the U.S., according to Nicholson.

The reverse mortgages at issue here – specifically, Home Equity Conversion Mortgages, or HECMs – allow older homeowners to access the equity in their homes while deferring payment until after their death or until they sell the home. They are available for borrowers age 62 and older, and they require no monthly mortgage payments.

Typical reverse mortgage customers are elderly, retired, and living on a fixed income, according to Nicholson.

In case of default, Champion Mortgage’s reverse mortgage terms allow the company to conduct property inspections to help protect its own interest in the property. The mortgage requires Champion Mortgage to give proper notice before inspecting. Fees for the inspection can be added to the borrower’s mortgage balance.

Nicholson’s own reverse mortgage was assigned to Champion Mortgage in 2012. She says Champion ordered and conducted five inspections in November 2016, assessing her a fee of $20 per inspection. She claims Champion gave her no notice prior to these inspections, breaching its obligations under the terms of its own mortgage agreement.

Nicholson accuses Champion Mortgage of conducting multiple unnecessary inspections solely for the purpose of increasing revenues through inspection fees.

She cites regulations of the Department of Housing and Urban Development that prohibit mortgage servicers from assessing inspection fees that are unnecessary or unreasonable. Other regulations limit the time between inspections to a minimum of 25 days, and then only when a visual inspection has confirmed that the property is vacant.

“It is unreasonable, unnecessary, inappropriate and in direct breach of the reverse mortgage contract, for Champion to order additional, systematic inspections in quick succession without notice, and of course to charge Plaintiff for those inspections,” according to her Champion Mortgage class action lawsuit.

Nicholson proposes to represent a nationwide Class consisting of all U.S. residents who have reverse mortgages serviced by Champion and whose accounts were assessed fees for property inspections that the borrower received no notice for. She also proposes a subclass representing Class Members who reside in Illinois.

She seeks an award of damages and equitable relief to be determined at trial, plus interest, attorneys’ fees, and costs of the litigation.

Nicholson is represented by attorneys Katrina Carroll and Ismael T. Salam of Lite DePalma Greenberg LLC and Joseph G. Sauder, Matthew D. Schelkopf and Joseph B. Kenney of McCune Wright Arevalo LLP.

The Champion Mortgage Company Inspection Fees Class Action Lawsuit is Rena Nicholson v. Nationstar Mortgage LLC, Case No. 1:17-cv-01373, in the U.S. District Court for the Northern District of Illinois.