Feds Reneged on Loan Promises, Reverse-Mortgage Lawsuit Claims

The Government National Mortgage Association, known as Ginnie Mae, canceled liens on tens of millions of dollars in collateral after the bank agreed to make a loan to Reverse Mortgage Funding LLC, according to the lawsuit. The loan was intended to prop up customers of the failed company, which was one of the largest providers of government-backed reverse mortgages.

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"If permitted, Ginnie Mae's position will likely trigger an unwillingness on the part of lenders (including TCB) to extend financing necessary for millions of current and future seniors to fund their retirement, and will threaten the viability of the HECM program," the company said in the complaint.