Nutter Home Loans Folds Amid Reverse Mortgage Lawsuit Filed by DOJ

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Reverse Mortgage Lender Crazy Home Loansaka James B. Nutter & Co., closed its doors amid a protracted struggle with the US Department of Justice. The news was first reported by local media The Kansas City Star.

The DOJ filed a lawsuit in late 2020 alleging reverse mortgage lender Nutter Home Loans falsified certifications and used unqualified underwriters to approve Federal Housing Administration (FHA) supported Home Equity Conversion Mortgage (HECM) arose between 2008 and 2010. In September, the trial was postponed to 2024 to allow both parties to gather the documents and information necessary for the case.

Nutter Home Loans maintains that no wrongdoing has taken place and said it remains confident that it will prevail in the legal case. The lawsuit will continue to be pursued even after the company closes, Nutter told the newspaper.

“Since the complaint was first filed in September 2020, Nutter has maintained that the Justice Department’s allegations are completely without merit,” said Jim Nutter Jr., president and CEO of Nutter Home Loans. . “Furthermore, nowhere in the Complaint alleges that any of Nutter’s borrowers were ineligible or unqualified to receive a loan, or that any action taken by Nutter harmed a borrower in any way. any way.”

Anonymous sources who spoke with the Kansas City Star said the length of the upcoming trial, combined with Nutter Jr.’s health issues, is the reason the company is closing.

The lender stopped taking out mortgages on October 20, according to the Star. The company, which has about 125 employees, will only keep a small number while the rest will be made redundant, according to the story.

The original DOJ complaint was filed in September 2020 under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and the False Claims Act (FCA), after being investigated by the Commercial Litigation Branch of the Department of Justice. Civil Division, the U.S. Attorney’s Office for the District of Columbia, HUD, and HUD’s Office of Inspector General (OIG).

Nutter Home Loans is considered a pioneer in the reverse mortgage industry due to its rapid adoption of the Home Equity Conversion Mortgage (HECM) program after its launch in 1989. At its peak, Nutter managed approximately $7 billion per year in Mortgages.

Nutter’s origination volume has fallen sharply in recent years. According to mortgage software Modex, Nutter has created just $102 million in mortgages since the start of the year. In 2021, it issued $503 million in mortgages and $590 million in 2020.

These days, only a small percentage of company originations are reverse mortgages.

RMD contacted Nutter Home Loans representatives but did not immediately respond.

Read the story at Kansas City Star.

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