Finance of America Reverse Mortgage Fraud: The Loan Amount Came With the Appraisal Order

Finance of America Reverse agreed to a $2.47 million settlement in a mortgage fraud case over allegations that predecessor Urban Financial Group tried to influence reverse-mortgage appraisals. The Justice Department alleged that Urban sent appraisers the loan amount on the form ordering their work. If you handled those orders or reviewed the resulting loan files, the instruction sent before the appraisal may be the part of the transaction you know best.

The Justice Department announced the resolution on March 31, 2020. This page follows Urban’s appraisal instructions, the later acquisition and the separate settlement components; our broader HECM reverse mortgage fraud coverage follows the program through underwriting, assignment and servicing claims.

What Did Urban Allegedly Send to HECM Appraisers?

Urban allegedly used appraisal-order forms that supplied the loan amount and other communications intended to influence the appraised value. The Justice Department placed that conduct before May 1, 2010 and alleged that Urban knowingly originated and underwrote hundreds of Home Equity Conversion Mortgage loans that failed critical Department of Housing and Urban Development requirements.

The program depends on reliable property values. Home Equity Conversion Mortgages allow homeowners age 62 and older to draw on their home equity to supplement income and remain in their homes. The Federal Housing Administration insures the lender against loss, and the Justice Department’s announcement emphasized that lenders must use reliable, accurate appraisals when approving loans for that insurance.

The alleged interference began when Urban ordered the appraisal, before the valuation entered the underwriting file. That puts the appraisal instructions and communications beside the finished report as evidence worth understanding. An employee who saw the request may know something that someone reading only the completed loan file would miss.

In the Justice Department’s allegation, we see a lender asking for a reliable property value while giving the appraiser the loan amount. The form came with a hint.

Why Does Urban’s Acquisition Matter?

Finance of America Reverse acquired Urban Financial Group in November 2013, after the appraisal practices described in the settlement. The Justice Department identified Finance of America Reverse as a mortgage lender based in Tulsa, Oklahoma, and Urban as the predecessor whose origination and underwriting were at issue.

For someone whose files span a change of ownership, that history makes the company identity on each record useful. We follow who ordered the appraisal, who approved the underwriting and which mortgagee adopted the representation. The originator, mortgage owner and servicing company can occupy different places in the same loan’s history.

An appraisal instruction, an underwriting approval and a later insurance claim each have their own author and date. Connecting those records lets us follow the decision from the company that made it to the company seeking payment, including any handoff in between. The acquisition date belongs alongside that history, while the actual documents show who did the work.

Why Are the False Claims Act and HUD Amounts Separate?

Finance of America Reverse agreed to pay $1.97 million to resolve False Claims Act claims and an additional $500,000 to the Department of Housing and Urban Development for administrative liability. The Justice Department, the U.S. Attorney’s Office for the District of Columbia, the housing department and its Inspector General investigated the alleged origination and underwriting practices.

The distinction between HUD’s administrative remedies and a false-claims recovery matters when we assess the evidence. We examine the underlying decisions and payment records with you to identify the case your information can support.

What HECM Records Connect the Appraisal to Government Money?

The appraisal order, communications, completed appraisal and underwriting approval connect the lender’s instructions to the value it accepted. We examine those records together, including their dates and the people acting for the lender at each stage.

The next connection is to the insurance and payment record. The housing department’s HECM servicing provisions describe qualifying assignment, in which an insurance payment transfers the mortgage asset to the government. The government then holds a loan it can collect on. Following the payment, acquired asset and later recoveries gives the money side of the inquiry the same attention as the original approval.

For someone reviewing claims, the loan’s insurance endorsement, assignment or other claim, payment and later recoveries supply that history. For someone in origination, the appraisal request and the approval supply the beginning. We bring those views together around the same loan so the instruction, representation and payment can be examined as one transaction.

Nutter’s HECM Case Put the Underwriting Signature in Question

Nutter Home Loans, the trade name of James B. Nutter & Company, agreed to a $2.4 million settlement announced in September 2024. The Justice Department alleged that the lender used inexperienced temporary underwriters and signatures that were falsified or affixed before the underwriting files were complete.

That HECM case makes a useful comparison with Urban’s alleged appraisal practices. At Nutter, the question was who actually performed the review represented by the signature and whether the file was complete when the signature appeared. At Urban, the allegation concerned what the lender communicated to the appraiser before accepting the value. Both direct attention to the work behind the approval, where an underwriting employee may know more than the finished document says.

How Is This Different From the Finance of America Gateway Case?

Finance of America Mortgage’s Gateway case concerned early-default audits and compliance warnings in FHA lending. Finance of America Mortgage acquired Gateway Funding Diversified Mortgage Services in 2015 and agreed to a $14.5 million resolution announced in December 2018. A former Gateway employee’s qui tam case triggered the investigation.

In the Justice Department’s account of the settlement, Gateway admitted failures to audit all required early-default loans, disregard of compliance warnings and failures to meet the housing department’s self-reporting requirements. That account gives a quality-control employee a different point of recognition: what the reviews found, who received the warnings and what the lender told HUD afterward. Urban’s reverse-mortgage allegations instead concerned the appraisal instructions entering the original underwriting process.

The Justice Department announced that the former Gateway employee was to receive nearly $2.4 million from the settlement proceeds. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We assess how the file you know connects to that government payment and bring in whistleblower lawyers with the mortgage expertise the case needs.

You Saw What the Appraiser Was Sent

If you handled reverse-mortgage appraisal orders, underwriting approvals or the handoff into insurance claims, tell our whistleblower experts what the lender’s instructions revealed. We develop the case with you and bring in HECM fraud whistleblower lawyers who understand appraisal influence and reverse-mortgage underwriting. You have a partner from the first conversation about that file through the pursuit of the government’s recovery.