HUD-HECM Complaint Notice of Default-Intent to Foreclose

8/20/2019 HUD-HECM Complaint Notice of Default-Intent to Foreclose

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VIA UPS NEXT DAY AIR August 9, 2012

U.S. Department of Housing and Urban Development (HUD)Atlanta HUD Homeownership Center ATTN: Director, Program Support Division

40 Marietta Street, 8th Floor Atlanta, GA 30303-2806

Reverse Mortgage Solutions, Inc. (RMA)2727 Spring Creek DriveSpring, TX 77373

Complaint: HUD Complaint, HUD Reverse Mortgage Handbook 7610.01, Section 4-19

Dispute: Notice of Default and Intent to Foreclose, acct./loan no. 68011002615899

Dear HUD and RMA:

Recently we found a material alteration to our HECM reverse mortgage made by interlineationafter execution. (Exhibits 32 and 33). Please take notice that we DO NOT ratify the change. Theinterlineation is a hand-written alteration, not initialed and not dated, and vitiates the mortgage.

The interlineation is an attempt to add a new party to the reverse mortgage, Penelope M.Gillespie individually. The interlineation recently came to our attention when an attorney weconsulted found the altered mortgage on the Marion County Clerk’s website. This mortgageedocument differs from the mortgage documents we signed June 5, 2008 with no interlineation.On January 15, 2009 Bank of America provided us with copies of the mortgage documents thathave no interlineation. (Exhibits 9 and 10). Therefore I conclude that the interlineation is

evidence of fraud by the lender and/or lender-affiliated parties.

Under Florida law a material alteration voids the instrument and destroys the identity of thecontract rendering it unenforceable. Bland v. Fidelity Trust Co., 71 Fla. 499, 71 So. 630 (1916).

Since a HECM reverse mortgage is a non-recourse loan, the void contract is unenforceable, and the lender has no further means to collect the debt beyond the terms of the original documents.

In addition, a review of the file in this matter shows fraud and gross misconduct by the lender and lender-affiliated parties, including the HECM-approved reverse mortgage counselor.

This letter is a complaint to the U.S. Department of Housing and Urban Development (HUD) as provided for in the HUD Reverse Mortgage Handbook 7610.01, Section 4-19 Concerns or Complaints Regarding a HECM Lender or Reverse Mortgage Counselor.

The records of RMS are not accurate. There are three borrowers, including Neil Gillespie, who iscurrently living in the home. Therefore RMS’s “Notice of Default and Intent to Foreclose” dated June 8, 2012 is improper. (Exhibit A). There are no grounds for acceleration of the debt.

RMS

RMS


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HUD Complaint - Dispute Notice of Default and Intent to Foreclose August 9, 2012

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The fraudulent assignment of June 3, 2008 did not comply with RESPA, the Real EstateSettlement Procedures Act (12 U.S.C. 2605), including notice of the assignment. (Exhibit 3).

Bank of America notified us by letter that effective July 1, 2011 “…the servicing of reversemortgage loans by our subsidiary-BAC Home Loans Servicing, LP, will transfer to our parent

company-Bank of America, N.A.”. This is a request for a copy of the July 1, 2011 assignment.

Also, Jessica Yee made a “Direct Endorsement Allonge” - without recourse - May 29, 2008 that predates execution of the Note by a week. The Note was signed June 5, 2008. (Exhibit 4).

The original settlement date of May 29, 2008 was canceled because our attorney Robert Stermer became ill and could not attend. The settlement was rescheduled, and closed June 5, 2008.

2. HECM Loan Originator Liz Baize of Park Avenue Bank - Application Not Right

Neil Gillespie had an existing and ongoing banking relationship with Park Avenue Bank (PAB),

consisting of a monthly automatic deposit of his disability check and a small savings account.That existing relationship was the basis for going to PAB for a HECM reverse mortgage.

A recent review shows that the HECM residential loan application was not accurate. Fannie Maeloan form (no. 1009, 05/2004) signed by Penelope Gillespie and Liz Baize of Park Avenue Bank on June 5, 2008 explicitly states in the opening paragraph that “Co-borrower information must be provided when a person other than the “Borrower”…is a co-owner of the real property thatwill be used as a basis for loan qualification…”. (Exhibit 5). (see page four (4), paragraph 1,Instructions for completing the residential loan application for reverse mortgages).

Contrary to law, the application does not show that the property title is held in an Inter Vivos

(Living) Trust. The application incorrectly shows the property held in the sole name of PenelopeM. Gillespie. This application was completed by Liz Baize of Park Avenue Bank, the loanoriginator, and signed June 5, 2008 by Ms. Baize. This incorrect information is repeated in theattached Addendum. As a factual matter, the quit-claim deed is titled to Penelope M. Gillespie, Neil J. Gillespie and Mark Gillespie, as Co-Trustees of the Gillespie Family Living Trust.

Liz Baize, Park Avenue Bank, Financial Title Company, and Liberty Reverse Mortgage all knewthat the property was not titled in the name of Penelope M. Gillespie. The Borrower’s Escrow

Instructions, dated May 28, 2008 by Financial Title Company, shows: (Exhibit 6)

“…the property described in Preliminary report issued by Mercury Transaction Services,

Report No. 42613725, dated April 16, 2008, showing title vested in Penelope M.Gillespie and Neil J. Gillespie and Mark Gillespie, as Co-Trustees of the GillespieFamily Living Trust Agreement dated February 10, 1997, describing the property knownas: 8092 SW 115th Loop, Ocala, FL 34481.”

Nonetheless, Liz Baize and Park Avenue Bank certified the false information as correct.


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Furthermore, on page three (3) of the application, part VII, Acknowledgment and Agreement,item 10, representations were made as to the value of the property by Liz Baize, Park AvenueBank, the appraisal company, Liberty Reverse Mortgage, and the HUD HECM consumer reversemortgage counselor Susan Gray/CCCS/MMI. Representations of property value were made bythese parties in various financial schedules and loan projections, described in detail below.

An earlier HECM residential loan application dated April 25, 2008 signed by Penelope Gillespieand Liz Baize/Park Avenue Bank is essentially the same as June 5th application, and contains thesame false information about the title to the property. (Exhibit 7).

3. Original Settlement May 29, 2008 Canceled Due To Attorney Illness

The original settlement date of May 29, 2008 was canceled because our attorney Robert Stermer became ill and could not attend. The settlement was rescheduled, and closed June 5, 2008.

Liz Baize of Park Avenue Bank, the loan originator, provided Neil Gillespie with copies of the

unsigned documents from the canceled closing of May 29, 2008, along with a handwritten noteon bank letterhead that read: (Exhibit 8)

Neil, Received permission to give you this copy for review in the event you want to pick up again next Thurs. If you decide to confirm next Thurs at 2:00 a 48 hour notice would be good. Thank you. Liz.

Liz Baize hand delivered the documents to Neil Gillespie at our home. Ms. Baize provided 149 pages of HECM loan documents, including an Estimated Borrowers Closing Statement thatshows three (3) borrowers: Penelope M. Gillespie, Neil J. Gillespie, and Mark Gillespie. (Printed by Fatima Pacheco on 05/28/08 at 1:55:48PM).

Liz Baize also provided “Borrower’s Escrow Instructions” that shows the property title vested inthe names of Penelope M. Gillespie, Neil J. Gillespie, and Mark Gillespie, as Co-Trustees of theGillespie Family Living Trust Agreement dated February 10, 1997. (Exhibits 6 and 8). Ms. Baize provided copies of other documents that also showed three (3) borrowers, such as the HECMReverse Mortgage (first and second) and the HECM Note (first and second).

Also included was a Notice of Assignment, Sale or Transfer of Servicing Rights: (Exhibit 3)

You are hereby notified as a requirement of Section 6 of the Real Estate SettlementProcedures Act (RESPA) (12 U.S.C. 2605) that the servicing of your mortgage loan, that

is, the right to collect payments from you, is being assigned, sold or transferred fromLiberty Reverse Mortgage, Inc. to Bank of America, N.A effective June 03, 2008

Liberty Reverse Mortgage went ahead with the assignment June 3, 2008, even though the loandid not close May 29, 2008. The loan closed June 5, 2008, two days later.


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4. Original HECM Mortgage and Note Shows Three Borrowers

The original HECM Mortgage and Note shows three borrowers. Neil Gillespie provided copiesof these documents to RMA in a RESPA request dated May 14, 2012. RMA returned the copies.

The HECM documents in Exhibits 9 through 12 were provided by Tom DeBeauchamp of Bank of America to Penelope Gillespie January 15, 2009 by FedEx. (Exhibit 34). No cover letter was provided by Bank of America, just 126 pages of copies. This was in response to our request toBank of America for copies of signed documents from the June 5, 2008 settlement.

a. The HECM reverse mortgage documents (both first and second mortgages) show three(3) mortgagors as borrowers: (Exhibits 9 and 10).

“THIS MORTGAGE ("Security Instrument") is given on June 05, 2008. The mortgagor is Penelope M. Gillespie, Neil J. Gillespie and Mark Gillespie, as Co-Trustees of TheGillespie Family Living Trust Agreement dated February 10, 1997, whose address is

8092 SW 115th Loop, Ocala, FL 34481 ("Borrower").”

b. The HECM adjustable rate Note documents (both first and second Notes) defines theterm “Borrower” in paragraph 1, definitions: (Exhibits 11 and 12)

“1. DEFINITIONS "Borrower" means each person signing at the end of this Note.”

The note show three (3) persons signed, each as are borrowers: Penelope M. Gillespie, Neil J.Gillespie and Mark Gillespie, as co-trustees of The Gillespie Family Living Trust Agreement.

c. Co-trustees are persons and therefore borrowers as defined by the Note. This definition

is consistent with HUD’s model forms in Appendixes 2 and 3 to HUD handbook 4235.1.Because co-trustees are persons and therefore borrowers, the trust provision in the mortgage isambiguous and should be construed in favor of the borrower(s). Paragraph 9(e) of the mortgage,last sentence, states: “A trust shall not be considered an occupant or be considered as having a principal residence for purposes of this Paragraph 9.”

Taken on its face as true, the trust is not an occupant, nor does it have the property as its principal residence. A trust is a legal fiction and does not reside anywhere. Co-trustees are

people, and "Borrower" means each person signing at the end of this Note. Neil Gillespie is a person, a co-trustee, and a borrower residing in the property.

5. Material Alteration to the Original HECM Mortgage

A material alteration was made by handwritten interlineation, with no initials and no date, to theoriginal HECM mortgage sometime after the parties signed the mortgage on June 5, 2008. Pleasetake notice that we DO NOT ratify the change. The altered mortgage was filed June 25, 2008with the Marion County Clerk of Court. This altered mortgage came to the attention of NeilGillespie July 12, 2012 by reading the official record on the Marion County Clerk’s website.


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A copy of the altered HECM mortgage accompanies this complaint as Exhibit 32. A copy of thealtered HECM second mortgage accompanies this complaint as Exhibit 33.

The following material alterations were made by handwritten interlineation to the HECMmortgage after the fact, and not initialed or dated by any party to acknowledge the changes.

a. A material alteration was made to the HECM mortgage by way of a handwritteninterlineation above the name of Penelope M. Gillespie in the second sentence that reads“individually and as trustee”. This material alteration was not initialed or dated by any party.

b. A material alteration was made to the HECM second mortgage by way of ahandwritten interlineation above the name of Penelope M. Gillespie in the second sentence thatreads “individually and as”. This material alteration was not initialed or dated by any party.

c. Someone also removed on the HECM mortgage the printed words “prepared by”located under the Liberty Reverse Mortgage address block on the first page, and added the

handwritten words “Prepared By:” over the same Liberty Reverse Mortgage address block. Thisalteration was not initialed or dated by any party.

d. Someone also removed on the HECM second mortgage the printed words “prepared by” located under the Liberty Reverse Mortgage address block on the first page, and added thehandwritten words “Prepared By:” over the same Liberty Reverse Mortgage address block. Thisalteration was not initialed or dated by any party.

e. On the HECM mortgage someone added to the signature block the property address inhandwritten script, and asterisks by the names Penelope M. Gillespie and Neil J. Gillespie. The nameof Mark Gillespie was crossed out in this signature block. In the signature block for Mark Gillespie,

someone added the property address in handwritten script, and crossed out the names of Penelope M.Gillespie and Neil J. Gillespie. These alteration were not initialed or dated by any party.

6. Property Deed Shows Vesting to Three Owners - First American Title Insurance Company

A quit-claim deed to the property at 8092 SW 115th Loop shows vesting to Penelope M.Gillespie, Neil J. Gillespie and Mark Gillespie, as Co-Trustees of The Gillespie Family LivingTrust Agreement dated February 10, 1997. A copy of the deed was provided to us April 4, 2011

by First American Title Insurance Company, along with a copy of the Florida Department of Revenue, Return for Transfers of Interest in Real Property. (Exhibit 13).

7. HUD - HECM Consumer Reverse Mortgage Counseling

Penelope Gillespie and Neil Gillespie attended telephonically April 22, 2008 HECM consumer reverse mortgage counseling with Susan Gray of Consumer Credit Counseling Services, MoneyManagement International Incorporated (CCCS/MMI). MMI is located in Beaumont, Texas.

Counseling is required by HUD for the purpose of providing to borrowers “…information aboutthe implications of and alternatives to a reverse mortgage.” Ms. Gray certified in accordance


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with Section 255 of the National Housing Act and 24CFR 206.41, that she discussed in detailitems 1 through 7 listed on the certificate, including number 3, “The financial implications of entering into a Home Equity Conversion Mortgage.” (Exhibit 14)

The “counseling” provided by MMI did not meet requirements set forth in the HUD Reverse

Mortgage Handbook. The financial information provided by MMI has since proved wildlyinaccurate. The session was perfunctory and did not provide any actual counseling as required.

HUD HECM Reverse Mortgage - Very Complex Financial Product

A HUD HECM Reverse Mortgage is a very complex financial product. The consequences to the borrower, the family and the estate are significant and life changing. Those consequences canstrip borrowers of home equity, threaten families with foreclosure, and destabilize communities.

HUD has published at least two Reverse Mortgage Handbooks, HUD handbook 4235.1 REV-1issued November 18, 1994, and HUD handbook 7610.1 REV-5 issued May 2010. At the time of

the HUD counseling session and reverse mortgage, we did not know that a handbook existed.Parts of the handbooks are similar, but the Appendixes are not. HUD handbook 7610.1 has four (4) Appendices, and HUD handbook 4235.1 has twenty-three (23) Appendixes. Each handbook exceeds 180 pages. Below is a link to the HUD handbooks and other HUD publications.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh

Appendix 4 to HUD handbook 7610.1 is the “HECM Counseling Protocol”, and as the namesuggests, consists of one hundred one (101) pages of counseling protocol for HECM loans, and includes the following: (NOTE: HUD also has a separate, HECM Housing Counseling Protocol

7610.0 online http://portal.hud.gov/hudportal/documents/huddoc?id=7610-0_COMBINED.PDF)

APPENDIX 4 - HECM Counseling Protocol

Table of Contents

I. Objectives of Reverse Mortgage Counseling 78II. Reverse Mortgage Counselor Roles and Responsibilities 78III. The Counseling Session 81IV. Client Needs and Circumstances 92V. Features of Reverse Mortgages 96VI. Financial Alternatives and Supplements 109

VII. Reverse Mortgage Counseling Tools 113

Attachment A: HUD Counseling Policies 115Attachment B: Resources for Counselors 130Attachment C: Resources for Clients 152

Appendix 4 states in section II. Reverse Mortgage Counselor Roles and Responsibilities, that theresponsibility of the counselor includes: (page 80)


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Reviewing the Client’s Level of Understanding

“The counselor must make specific efforts to review the client’s level of understanding of reverse mortgages, including the following:

1. The basic mechanics, requirements and implications of a reverse mortgage;2. The impact on the client’s personal financial situation of the particular loan in whichhe or she is interested; and 3. The client’s responsibilities and requirements for residency under the mortgage

Review Tool

Attachment B.10 provides a list of questions the counselor must ask to assess client

comprehension. Counselors must ask questions about reverse mortgages in general

and questions appropriate to the specific client situation. The client must be able to

answer five of the ten questions in order to receive the counseling certificate during

the first session. These questions will be interspersed throughout the session. Thecounselor will ask questions in the spirit of a review throughout the counseling

session, rather than an exam at the end of the session, in order to avoid intimidating

or insulting the client.

The counselor may discontinue the session without issuing the certificate if it is apparentearly in the counseling session that the client is not able to understand the material. Refer to Attachment B.10 for the appropriate course of action in this case.

Attachment B.10, “Reviewing the Client’s Level of Understanding” is attached to this complaintas Exhibit 42. This four (4) page attachment begins:

The content of a reverse mortgage counseling session is comprehensive and complex. Atruly informed decision to apply for a reverse mortgage requires both an understanding of the essential elements of the loan and the ability to apply that knowledge to the client’sindividual situation. Part of the counselor’s role is to review, during and at the end of every session, whether the client has been adequately informed and has a level of understanding indicating he or she grasps the fundamental facts of a reverse mortgage.

Other requirements set forth in Attachment B.10 include: (Exhibit 41)

During the session, counselors must ask ten questions to determine whether the client has

understood the essential features of the reverse mortgage. These questions explore someof the most fundamental facts about reverse mortgages – things that every adequatelyinformed client must know.

Clients must answer five questions correctly to receive the Counseling Certificate atthe initial counseling session. For additional instructions on what counselors should do if the client cannot answer five questions correctly see the section titled Results of theReview….Whenever possible, avoid yes/no questions.


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If there are two or more borrowers, the counselor may request that each client alternateanswering questions. In addition, if one client appears to be quieter and less involved during the session, the counselor may direct the questions entirely to that client, whileasking the other client to remain silent. If the quiet client cannot respond, then the

counselor may allow the other one to answer the question. The counselor must avoid allowing a dominant client to completely take over the question and answer exchange.

If the client is accompanied by a legal representative (e.g., someone who has durable power of attorney), direct the questions to the client whenever possible, asking the agentto remain silent until the client has attempted to answer. If the client is unable to respond adequately, the certificate should be signed by the legal representative only and should include the notation that the client was unable to fully participate in counseling.

Results of the Review

Counselors must make detailed notes about difficulties the client has in answering

questions, particularly when the answers are grossly inadequate, as this will help supportany decision to withhold or delay issuing the certificate.

Because these questions are meant to test the most basic reverse mortgage concepts, if the client cannot provide adequate answers for five questions, there may be concernabout his or her ability to make an adequately informed reverse mortgage decision. If thatis the case, the counselor must not issue the counseling certificate after the firstcounseling session, but must propose additional ways to help the client gain the necessaryknowledge. These options must meet the client’s specific needs.

During any additional counseling sessions, the counselor will ask the review questions

again. If the client again is not able to correctly answer five out of the ten questions, thecounselor will ask the client if they would like additional time and invite them to come back at a later date after they have had more time to study the materials. A certificatecannot be issued until the client correctly answers 5 out of the 10 questions.

Each handbook references the other, and both appear relevant to a reverse mortgage made today.In addition, the HUD handbooks not only make reference each other, but to many additionallaws and regulations, including a number of civil rights laws. For example, HUD handbook 7610.1, Chapter 3, Section 3-1 F. Civil Rights, states:

F. Civil Rights. All participating agencies must administer their housing counseling

programs in accordance with and remain in compliance with corresponding Departmentalregulations and guidance and the following nondiscrimination regulatory and legislativerequirements:

a. Title VI of the Civil Rights Act of 1964, b. Title VIII of the Civil Rights Act of 1968,c. Executive Order 11063,d. Section 504 of the Rehabilitation Act of 1973,


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e. The Age Discrimination Act of 1975f. Americans with Disabilitiesg. Title IX of the Education Amendments of 1972.

These requirement are designed to prevent discrimination in the delivery of benefits and

services because of race, color, religion (creed), sex, national origin, age, familial statusor disability.

Because of the complex nature of a HECM Reverse Mortgage, participating agencies must offer and be able to provide counseling, as opposed to just education. (HUD handbook 7610.1, 3-1 A).

A. Counseling. Participating agencies must offer and be able to provide counseling, asopposed to just education, to current and potential homeowners or tenants to assist themin improving their housing conditions and in meeting the responsibilities of homeownership or tenancy. Participating agencies must provide counseling on one or more of the topics outlined in Paragraph 3-6.

Counseling activities must be limited to the geographic area specified in the agency’s approved housing counseling work plan. (HUD handbook 7610.1, 3-1 E).

E. Geographic Scope. Regardless of the setting or format, counseling activities must belimited to the geographic area specified in the agency’s approved housing counselingwork plan. For example, agencies may only offer telephone counseling to clients in their approved geographic area. With HUD’s approval, or at HUD’s discretion, geographicscope can be expanded or reduced.

In order for a client to be classified as counseled under HUD’s Housing Counseling program, the

client must receive all of the basic services outlined in §214.300 (6)(b) and Items A – E below.(HUD handbook 7610.1, Chapter 3, Section 5). A housing counselor must perform and document these activities. (only Section 3-5 D is shown here).

3-5 D. Financial Analysis. Every housing counseling session requires an analysis of theclient’s unique financial situation. This includes but is not limited to:

1. A review of the client's income, expenses, spending habits, home values and use of credit.

2. A comparative analysis of the client’s spending habits to determine if theclient’s habits are more suitable for renting than owning.3. The establishment of a household budget that the client can afford.

HUD states that all borrowers on the deed must have counseling. See page 34, HUD handbook 7610.1, Chapter 4, Section 4-1 E.

E. Counseling Requirement for Home Equity Conversion Mortgage HECM) Borrowers.Section 255(d) of the National Housing Act and the implementing FHA regulations at 24

CFR § 206.41 state that all prospective HECM borrowers must receive reverse mortgagecounseling prior to obtaining a HECM. This counseling must be received from eligible


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counselors working for participating agencies approved to provide this statutorilyrequired counseling.

To meet the statutory requirements for obtaining a HECM, the prospective borrower mustreceive one-on-one reverse mortgage counseling and be issued a HECM counseling

certificate. Counselors are allowed to provide the required reverse mortgage counselingto a group of related family members if they are documented on the deed together.

HUD states any person(s) listed on the deed must receive reverse mortgage counseling, including beneficiaries of a life estate trust. See page 42, HUD handbook 7610.1, Chapter 4, Section 4-14.

4-14 HECM Borrowers – Persons Required to Receive Reverse Mortgage HousingCounseling. All eligible HECM borrower(s) meeting the requirements of Handbook 4235.1, including all eligible mortgagors on the property deed, must receive reversemortgage counseling covering the topics outlined in this chapter.

In the event that multiple eligible borrowers shown on the deed are not located in thesame place, counseling may be provided to these parties by one counselor viateleconference call or the individuals may receive counseling separately from differentcounselors. However, HUD expects counseling agencies to avoid unnecessary separatecounseling, and to make every practical effort to counsel the borrower(s) and any related parties simultaneously.

A. Person(s) on the Deed. Any person(s) listed on the deed must receive reversemortgage counseling. (NOTE: Mark Gillespie is on the deed and did not receivecounseling)

B. Beneficiaries of Life Estates. FHA will insure a HECM on property held in the nameof a trust with beneficiaries according to the provisions described in the HECMHandbook 4235.1, Rev.1 and Mortgagee Letter (ML) 93-22. The HECM Handbook and ML 93-22 provide, in part, that all beneficiaries of the trust should be eligible HECM borrowers at the time of origination and until the mortgage is released. Current trust beneficiaries or individuals who are eligible HECM borrowers and are seeking a HECMloan must attend reverse mortgage counseling and sign the HECM counseling certificate.

The following names are listed on the quit-claim deed, HECM Mortgage, and HECM Note:Penelope M. Gillespie, Neil J. Gillespie, and Mark Gillespie, as Co-Trustees of the GillespieFamily Living Trust. Mark Gillespie did not receive one-on-one reverse mortgage counseling

and was not issued a HECM counseling certificate. Neil Gillespie received one-on-one reversemortgage counseling and was issued a HECM counseling certificate.

Susan Gray/CCCS/MMI provided Penelope Gillespie and Neil Gillespie a HECM counseling package by mail April 23, 2008. (Exhibit 14). The counseling package contained the following:

a. Two Certificates of HECM Counseling, one for homeowner Penelope Gillespie and one for homeowner Neil Gillespie. The HUD certificate is on form OMB Approval No. 2502-


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0524. An attached note states: “If you decide to proceed with a Reverse Mortgage, you will need

to give BOTH of these ORIGINAL CERTIFICATES to the lender of your choice.

b. Reverse Mortgage Comparison - Selected Plans, prepared for Penelope Gillespie and Neil Gillespie. (Exhibit 14.1).

c. FHA's Monthly Adjustable Home Equity Conversion Mortgage (HECM) LoanEstimated Amortization Schedule for Penelope Gillespie and Neil Gillespie. (Exhibit 14.2). Theestimate makes certain assumptions, including, “Assumes an INITIAL Interest Rate of 3.170%And Home Price Appreciation of 4%.” The estimate makes no provision for falling home prices.

d. Four (4) additional pages of reverse mortgage information. (Exhibit 14).

A copy of the Certificate of HECM Counseling was signed by Penelope Gillespie. (Exhibit 15).The lender did not submit a signed Certificate of HECM Counseling for Neil Gillespie.

A voice recording of the telephonic counseling session was made in .wav format. A CD copy isenclosed. All calls made to home office telephone extension (352) 854-7807 are recorded for quality assurance purposes pursuant to Florida Statutes chapter 934, section 934.02(4)(a)(1) and the holding of Royal Health Care Servs., Inc. v. Jefferson-Pilot Life Ins. Co., 924 F.2d 215 (11thCir. 1991). This was to keep an accurate record of Ms. Gillespie’s medically-related calls from

doctors, and as a disability accommodation for Neil Gillespie.

Some of the information provided to Penelope and Neil Gillespie April 22, 2008 by SusanGray/CCCS/MMI during this counseling session was not accurate. For example, Ms. Gray said (at 26 minutes, 21 seconds in the recording) that in year 10 the balance on the loan would be$150,000, and the home value would be $207,000, resulting in equity of $57,000. However

today, four years into the reverse mortgage, the home value is $85,564, resulting in an equitydeficit of -$22,492 ($85,564 value - $108,056 RMA demand Jun-08-12).

At the end of the call, Ms. Gray said “Your home should maintain positive equity for a longtime”. (at 33 minutes, 50 seconds in the recording). Clearly this was inaccurate information. Ms.Gray did not state that the property could decline in value. When Neil Gillespie asked about the buyer’s margin interest rate, Ms. Gray was unable to answer, and said “and I’ll be honest Neil, Idon’t understand the mathematical reasoning either other than it has something to do with thefloor that was used when they made up these factor tables”. When Neil Gillespie asked what“floor” meant, Ms. Gray did not know. (at 41 minutes, 30 seconds).

The “FHA's Monthly Adjustable Home Equity Conversion Mortgage (HECM) Loan Estimated Amortization Schedule for Penelope Gillespie and Neil Gillespie” shows at year four (4) anending loan balance of $118,550, a home value of $163,780, and a retained equity of $45,230.(Exhibit 14.2). The actual home value today is $85,564, and the current loan balance is $108,056 per RMA’s demand letter of June 8, 2012, resulting in an equity deficit of -$22,492. The grossequity difference, as compared to the figures in Exhibit 14.2, is $67,722. (-$22,492 vs. $45,230).


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HUD and its agent Ms. Gray/CCCS/MMI owed Penelope Gillespie, Neil Gillespie, Mark Gillespie, and the Gillespie Family Living Trust, a fiduciary duty, and a duty of competence.

The financial disclosures provided by HUD/Susan Gray/CCCS/MMI about this reverse mortgagewere false, both in print form, and during the telephonic counseling session April 22, 2008.

8. HUD HECM Counseling For Borrowers Lacking Legal Competency

For borrowers lacking legal competency, the counseling session shall be conducted with a personholding a power of attorney (POA) for the borrower. HUD handbook 7610.1, Chapter 4, Section4-14 C, and elsewhere:

C. Borrower’s Legal Representative. For borrowers lacking legal competency, thecounseling session shall be conducted with a person holding a power of attorney (POA)for the borrower, or a court-appointed conservator or guardian.

HUD handbook 7610.1 states, Section 4-18 F. Issuing the Certificate of Counseling. (relevant part)

A certificate of counseling may be withheld if the counselor believes that the counselingrecipient did not understanding basic information about reverse mortgages.

A counseling agency must withhold a certificate from a client who cannot successfullyanswer five of the ten review questions that are provided in Attachment B.10 of theProtocol. The client will be given adequate opportunities to correctly respond to thereview questions in accordance with the requirements in Attachment B.10. The certificatecannot be withheld based on lack of payment.

The recording of the HUD telephonic counseling session April 22, 2008 with SusanGray/CCCS/MMI shows Penelope Gillespie did not actively participate in the call or thecounseling. Ms. Gray did not ask Ms. Gillespie to “successfully answer five of the ten reviewquestions” or make any effort to determine if she understood basic information about reversemortgages. Therefore Ms. Gray should not have issued the certificate to Penelope Gillespie.

Penelope Gillespie was not able to understand basic information about a reverse mortgage, or benefit from the telephonic counseling provided by Susan Gray/CCCS/MMI.

Penelope Gillespie Lacked Legal Competency

Penelope Gillespie suffered from Alzheimer’s dementia and other serious aliments at the time of the HECM reverse mortgage and counseling session. Ms. Gillespie lacked capacity to make acontract in 2008, and died of dementia September 16, 2009.

Neil Gillespie was appointed attorney-in-fact several times by Ms. Gillespie under Florida law,including a Durable Power of Attorney (POA) made February 21, 2006. A copy of the POA is provided as Exhibit 31.


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The record shows that this loan failed to comply with requirements related to competency as setforth in HUD handbooks 4235.1 and 7610.1. Neil Gillespie was Penelope Gillespie’s primarycaregiver and had POA, but the lenders and related parties failed to require the use of the POA.

Dr. Gregory J. Howell, MD, of the Ocala Neurodiagnostic Center, treated Ms. Gillespie for

dementia from November 2005 through December 2006. During an office visit May 8, 2006,Dr. Howell said Ms. Gillespie was not competent to make financial decisions, or to give thingsaway. Dr. Howell said someone must have POA to manage the affairs of Ms. Gillespie. NeilGillespie brought Ms. Gillespie to the office visit on May 8, 2006 and made notes. This officevisit was a follow-up to Dr. Howell’s written comments of March 27, 2006 opining about thecompetence of Ms. Gillespie. Dr. Howell wrote “It sounds to me like pt. has Alz. Dementia &needs supervision”. (double underline).

Neil Gillespie had written to Dr. Howell March 21, 2006 about certain transactions involving thedaughter of Ms. Gillespie. At the time Ms. Gillespie was not able to drive, not able to balanceher check book, and lacked understanding of her finances and legal matters. Ms. Gillespie

needed help with meal preparation, shopping, housework, and sometimes dressing. Ms. Gillespiewas dependent on Neil Gillespie to administer her medication, and for all aspects of her healthcare, since December 2005. Ms. Gillespie suffered an adverse reaction to Rythmol, ananti-arrhythmic heart medication. Ms. Gillespie was hospitalized December 6, 2005 throughDecember 23, 2005, followed by inpatient nursing care through January 16, 2006. The incidentwas life-threatening.

Neil Gillespie was caregiver to Penelope Gillespie as defined by § 825.101(2), Florida Statutes:

(2) “Caregiver” means a person who has been entrusted with or has assumed responsibility for the care or the property of an elderly person or disabled adult.

“Caregiver” includes, but is not limited to, relatives, court-appointed or voluntaryguardians, adult household members, neighbors, health care providers, and employeesand volunteers of facilities as defined in subsection (7).

Neil Gillespie was appointed “Designated Health Care Surrogate” by Penelope Gillespie under Florida law February 21, 2006.

Neil Gillespie was designated proxy by Penelope Gillespie under her “Advance Medical

Directive” or living will May 4, 2006 under Florida law.

HUD handbook 4235.1 REV-1, 4-6 POWER OF ATTORNEY AND CONSERVATORSHIP

GUIDELINES. The following guidelines apply to all phases of HECM loan processing:

2) Borrowers lacking legal competency:a. Incompetent borrower may not sign the mortgage loan application.c. A person holding a durable power of attorney specifically designed to surviveincapacity and avoid the need for court proceedings, may execute any necessarydocuments, including the mortgage loan application.


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(1) To be valid, a durable power of attorney must be prepared when the"principal" is competent to understand the nature and significance of theinstrument.(2) The durable power of attorney must comply with State laws regardingsignatures, notarization, witnesses, and recordation.

(4-6) C. Counseling Session. For borrowers lacking legal competency, the counseling sessionmay be conducted with a person holding a power of attorney, or with a court-appointed conservator or guardian.

(4-7A.) b. If the borrower lacks legal competency and the loan application is being executed by a person holding a durable power of attorney, or by a court-appointed conservator, the face-to-faceinterview must be conducted with the person holding the power of attorney or conservator.

HUD handbook 4235.1, CHAPTER 6. CLOSING AND ENDORSEMENT

6-7 BORROWERS LACKING LEGAL COMPETENCY. Power of attorney (durable or otherwise) may be used for closing documents. Any power of attorney must comply with Statelaw and allow for the Note to be legally enforced in that jurisdiction (see Paragraph 4-6).

HUD handbook 7610.1, CHAPTER 5. RECORDKEEPING AND REPORTING

5-7 Counseling File. The housing counseling agency must maintain a separateconfidential file documenting each unique, distinct provision of counseling services provided to a client, as described in §214.300 and Chapter 3.

The client file may be for an individual or household or for a group of clients with the

same housing need, such as tenants of an apartment complex with the same complaintagainst their landlord. Files may be electronic or a combination of electronic and paper.The file must include the following items:

Q. Reverse Mortgage Counseling. Additional documentation required for reversemortgage client files:

3. Power of Attorney or other documents relating to legal competency, if applicable;

9. Misleading Financial Projections from Liberty Reverse Mortgage

Liberty Reverse Mortgage, in an effort to sell its reverse mortgage product to Penelope Gillespie,

Neil Gillespie, and Mark Gillespie, made and provided a number of financial calculations. TheGillespie family relied on the information and made a reverse mortgage. Information provided by Liberty and relied upon by the Gillespie family has proved not accurate.

Liberty Reverse Mortgage, Financial Title Company, and Park Avenue Bank owed PenelopeGillespie, Neil Gillespie, Mark Gillespie, and The Gillespie Family Living Trust, a fiduciaryduty, and a duty of competence. Liberty breached that duty. As a result of the breach of duty, theGillespie family sustained damages, the loss of home equity and threat of foreclosure.


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Our reverse mortgage made June 5, 2008 is now over four years old. According to financialcalculations provided to us by Liberty Reverse Mortgage, we should have a positive net equity.Instead we have negative equity of -$22,492.

HUD creates false and misleading financial information through its Home Equity ConversionMortgages calculator for Housing industry professionals. (Exhibit 42). In turn the Housingindustry professionals use this false and misleading information to sell HECM reverse mortgagesto unsuspecting and vulnerable senior citizens. As shown in our case, this practice strips borrowers of home equity and threatens families with foreclosure.

Liz Baize/Park Avenue Bank provided on April 25, 2008 “The Reverse Mortgage Analyst”,signed by Liz Baize/Park Avenue Bank and Penelope Gillespie. (Exhibit 16). The figures provided assume a 3.66% per year annual interest rate and 4.00% per year future homeappreciation. The Reverse Mortgage Analyst makes no provision for falling home prices. TheReverse Mortgage Analyst shows in year four (4) a loan balance of $100,839, a home value of

$146,232, and net equity of $35,158. The gross equity difference today is $57,650. (-$22,492 vs.$35,158). (Exhibit 16). (Note: The page numbers on this document are not consecutive,suggesting pages may be missing).

A letter to Penelope Gillespie dated May 16, 2008 from Frank A. Castillo of Liberty ReverseMortgage states “We have enclosed updated figures for your review.” (Exhibit 17). Note that theletter from Mr. Castillo is on plain paper, not company letterhead. This may be due to the factthat Liberty Reverse Mortgage had been acquired by Genworth Financial Inc.

The Reverse Mortgage Analyst figures assume a 3.17% per year annual interest rate and 4.00% per year future home appreciation. The Reverse Mortgage Analyst makes no provision for falling

home prices. The Reverse Mortgage Analyst shows in year four (4) a loan balance of $101,269, ahome value of $154,421, and net equity of $42,343. The gross equity difference today is$64,839. (-$22,492 vs. $42,343). (Exhibit 17).

Liberty Reverse Mortgage provided at the closing June 5, 2008 “The Reverse Mortgage Analyst”signed by Penelope Gillespie. The figures provided assume a 3.66% per year annual interest rateand 4.00% per year future home appreciation. The estimate makes no provision for falling home prices. The Reverse Mortgage Analyst shows in year four (4) a loan balance of $114,502 a home

value of $154,421, and net equity of $29,109. The gross equity difference today is $51,601.(-$22,492 vs. $29,109). (Exhibit 18).

10. Financial Title Company Shows Three Borrowers on Final Closing Statement

Financial Title Company (California), provided two (2) different Final Closing Statements dated May 29, 2008. Each statement shows three borrowers: Penelope M. Gillespie, Neil J. Gillespie,and Mark Gillespie. One closing statement is on the letterhead of Financial Title Company. Theother statement is on HUD OMB Form 2502-0265. (Exhibit 19).


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Each statement shows an incorrect closing date. The loan closed June 5, 2008, not May 29th.Each closing statement shows that the settlement took place at 81 Blue Ravine Road, #220,Folsom, CA, 95630. This is incorrect. The settlement took place at Park Avenue Bank in Ocala,Florida. The HUD closing statement shows that the funding date was June 18, 2008. This isincorrect. The funding date was June 10, 2008. The closing statements were printed June 18,

2008 by Leanette Adorkor. A cover letter from Fatima Pacheco, Escrow Officer for FinancialTitle Company, accompanied the closing statements. The documents were sent through the U.S.mail, and therefore subject to 18 USC § 1341, mail fraud. (Exhibit 19).

A second different HUD closing statement was printed by Fatima Pacheco May 28, 2008 at2:00:42 p.m. that also shows three borrowers: Penelope M. Gillespie, Neil J. Gillespie, and Mark Gillespie. (Exhibit 20). This HUD closing statement was faxed May 29, 2008 to “Have Seal WillTravel” at (352) 854-0857. This is the fax number for Richard T. Kwiatkowski, of Have Seal -Will Travel, LLC. Mr. Kwiatkowski is the notary who appeared at Park Avenue Bank for theclosing. Mr. Kwiatkowski’s business card states that he is a Mobile Notary Public, ReverseMortgage Advisor, and Certified Loan Signing Agent. (Exhibit 21).

A third different Final Closing Statement was provided by Financial Title Company, on HUDOMB Form 2502-0265 with a closing date of June 5, 2008, and a disbursement date of June 10,2008. This closing statement shows only one borrower, Penelope M. Gillespie. This closingstatement shows the settlement took place at 81 Blue Ravine Road, #220, Folsom, CA, 95630.This is incorrect. The settlement took place at Park Avenue Bank in Ocala, Florida. This closingstatement appears to be signed “LA for Pacheco”, which may mean Leanette Adorkor for FatimaPacheco. The closing statement is also signed by Penelope M. Gillespie. (Exhibit 22).

The closing statement shown as Exhibit 22 also contains the following warning:

WARNING: It is a crime to knowingly make false statements to the United States on thisor any other similar form. Penalties upon conviction can include a fine and imprisonment.For details see Title 18 U.S. Code Section 1001 and Section 101

In addition to the above, there are other estimated closing statements.

11. Problems After Closing - New Documents Signed and Notarized

On June 10, 2008 at 4:49 p.m. Liz Baize of Park Avenue Bank sent Neil Gillespie the followingemail about the HUD HECM reverse mortgage loan: (Exhibit 23).

From: "LIZ BAIZE" To: Sent: Tuesday, June 10, 2008 4:49 PMSubject: update

Neil, there may be a day or two delay in funding your loan. I just notified your attorneythat a small revision needed to be done because A) with all that signing, a signature linefor your mom was missed AND the interest rate for the week before, although a slight


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difference, was picked up in closing package and identified prior to being sent to HUD.Richard (at out expense) has agreed to go to your attorneys office to meet you there tosign the corrections; and Mr. Stermer said that was fine with him. I am trying to confirmwith Liberty that they will cover any cost incurred if a notary needs to go back out toMark. The difference in rate over the life of the loan is less than 1/8th percent. As soon as

I know more I will be in touch.Sincerely,Liz BaizePAB

To correct the documents, Richard T. Kwiatkowski, of Have Seal - Will Travel, LLC, came tothe Gillespie Family home and made corrections. I do not recall exactly what was done, or if itwas limited to the issues in the email from Liz Baize.

12. HECM Notice of Right to Cancel - Three Day Recession Period

Penelope Gillespie was provided and signed June 5, 2008 the HECM Notice of Right to Cancel.(Exhibit 24). We considered exercising our rights under the notice to cancel the reversemortgage due to the high fees involved. We did not to cancel the reverse mortgage because weunderstood from the closing on June 5, 2008 that the loan was made to three borrowers. Thiswould give us longer use of the property, and more time in which to amortize the high fees.

13. Ongoing Problems and Confusion - HECM Reverse Mortgage and Bank of America

This HECM reverse mortgage was, and continues to be, very complicated and confusing. NeilGillespie contacted Bank of America many times after the closing in an effort to understand thisreverse mortgage. One such contact was a phone call December 8, 2008 to Rick Fann of Bank of

America about a $172.27 line of credit that appeared on the first monthly statement. This amountdeclined each month, as follows:

Statement Period 06/16/2008 - 06/30/2008 showed Available Line of Credit of $172.27.Statement Period 07/01/2008 - 07/31/2008 showed Available Line of Credit of $166.17.Statement Period 08/01/2008 - 08/31/2008 showed Available Line of Credit of $160.08.Statement Period 09/01/2008 - 09/30/2008 showed Available Line of Credit of $154.60.Statement Period 10/01/2008 - 10/31/2008 showed Available Line of Credit of $14833.

Statement Period 11/01/2008 - 11/30/2008 showed Available Line of Credit of $141.41.Statement Period 12/01/2008 - 12/31/2008 showed Available Line of Credit of $133.38.

For some reason the “Available Line of Credit” declined each month, but there were nocorresponding credit draw request. THE MONEY WAS DISAPPEARING INTO THIN AIR!

This negative growth was a concern. The $172.27 appeared to represent an overpayment of closing costs. We faxed December 26, 2008 a request for a return of the overpayment. The faxed letter was in the name of, and signed by Penelope Gillespie, but Neil Gillespie composed and faxed the letter on her behalf because Ms. Gillespie was not competent to do so herself.


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In response Bank of America issued two checks to Penelope Gillespie. One was a “NegativeGrowth Reimbursement Check” in the amount of $38.89 dated January 6, 2009 (Exhibit 35). Theother was check in the amount of $133.38. (Exhibit 36). This was followed January 14, 2009 bya seven-page letter of from Karen Yantis of Bank of America’s Reverse Servicing Division inSeattle. (Exhibit 37).

The seven-page letter from Karen Yantis of January 14, 2009 (Exhibit 37) presented a number of financial formulas and explanations best understood by a Certified Public Account with a lawdegree and a background in finance. The letter was largely incomprehensible to Neil Gillespie,and useless to Penelope Gillespie who was in an advanced stage of Alzheimer’s dementia. Oneconfusing statement (of many) in the letter appears on page four (4), paragraph five (5):

“On the surface, this may seem to be a decrease in the Net Principal Limit. However, if we take into consideration that there was a $2,000.00 advance added to the loan balance(see Outstanding Loan Balance section), we can see there is actually an increase in the Net Principal Limit of $557.98. To better highlight this, let's run through another month

of calculations using the new figures provided above.”

We are not aware “that there was a $2,000.00 advance added to the loan”. I cannot find evidenceof this alleged $2,000 advance. Ms. Yantis concluded her letter with this understatement: “Thecalculations referenced in this letter are quite complex and as such your Reverse Servicingdepartment welcomes any questions you may have regarding the calculations.”

14. Notice to Bank of America, and Reverse Mortgage Solutions

We gave Notice to Bank of America (BofA) of our position that the loan was not due becausethere were three borrowers, including Neil Gillespie, and he resides in the home. Written Notice

was provided to BofA by certified letter October 28, 2009, and several times thereafter.

We gave Notice to RMA of our position that the loan was not due because there were three borrowers, including Neil Gillespie, and he resides in the home. Written Notice was provided toRMA by fax on June 19, 2012. (Exhibit 25).

After The Loan Closed - Suspect Behavior by Lenders and Affiliates

15. Bank Failure: The Park Avenue Bank, Valdosta, Georgia

It appears that The Park Avenue Bank (PAB), Valdosta, GA, was insolvent and undercapitalized

when it originated a HECM loan to the Gillespie Family, resulting in cutting corners to sell a product and earn fees, with a disregard for HECM regulations.

On Friday, April 29, 2011 PAB was closed by the Georgia Department of Banking and Finance.PAB was assumed by Bank of the Ozarks. (Exhibit 26). The Federal Deposit InsuranceCorporation (FDIC) was named Receiver. (Exhibit 27). The Park Avenue Bank was losingmillions of dollars in July 2009 when the Federal Reserve and the Georgia BankingCommissioner entered into a Written Agreement with Park Avenue Bank, PAB Bankshares, and


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their institution-affiliated parties to strengthen credit risk management practices and improveassets, etc., see Docket Nos. 09-084-WA/RB-HC and 09-084-WA/RB-SM. (Exhibit 28). TheFDIC estimates the cost to the Deposit Insurance Fund (DIF) for bank’s failure is $306.1 million.

However R. Bradford Burnette, a retired PAB executive, did much better. Burnette walked away

with at least $1,422,831 from the bank’s holding company in 2009 at a time when the bank waslosing millions. Reuters reported that Burnette was paid $1,809,870 in 2009 by PAB Bankshares,Inc., the bank’s holding company. According to the 2009 Director Compensation Table, theCompany entered into a salary continuation agreement with Mr. Burnette while he wasemployed as an executive of the Company, an agreement that would provide Burnette with$165,087 per year for 15 years commencing when he turned age 65. At December 31, 2009, thenet present value of the remaining payments due to Mr. Burnette was $1,220,539 using adiscount rate of 6.36%. Still, that leaves $387,039 not accounted for from the Reuters story.

16. Financial Title Co. Shuts Down In California

Financial Title Company closed less that two months after it mishandled our HECM loan, whenit cut corners to earn fees, with disregard for HECM regulations.

Journalist Sharon Simonson of the Silicon Valley/San Jose Business Journal reported July 30,2008, “Financial Title Co. shuts down in California. (Exhibit 29). In part, the story states:

“Financial Title Co. has shut its doors across the state as part of a closure of multipleoffices and title companies by its parent, Mercury Cos. of Colorado.”

“The decision by the largest real-estate title agent in Silicon Valley follows a move byMercury's lenders to pull their line of credit after Mercury failed to meet loan

requirements, according to an e-mail from Jim Hilbun, president of United Title of Texas.Unite Title is also owned by Mercury.”

“Examiners representing the California Department of Insurance, which regulates and polices title policy underwriters and agents, were on hand at all 57 Financial Title officesin the state Wednesday to ensure that escrow funds were properly handled and not stolenor lost, said Darrel Ng, press secretary for the agency.”

“The abrupt move mirrors that of Financial's former sister company, Alliance Title Co.,which also closed with almost no notice late last year. Former employees and landlordsof Alliance have filed multiple lawsuits alleging they were not paid. Alliance declared

Chapter 7 bankruptcy in Northern California federal court June 5.”

17. Genworth lures Liberty Reverse Mortgage with $50 Million

This story shows the enormous profit in HECM lending to senior citizens, and a $50 million payment to the owners of Liberty Reverse Mortgage made about the time of our HECM loan,with the potential to earn more, resulting in cutting corners to sell a product and earn fees, with adisregard for HECM regulations.


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Staff writer Mark Anderson of the Sacramento Business Journal reported July 29, 2007,“Genworth lures Liberty Reverse Mortgage with $50 million.” (Exhibit 30). In part:

“Liberty Reverse Mortgage Inc. was not for sale. But Genworth Financial Inc. badly

wanted to add the nation's fourth-largest originator of reverse mortgages to its stable of financial services.”

“Last week, its persistence paid off, as Genworth announced it would pay $50 million for the four-year-old Rancho Cordova company. Liberty founders Scott Hanson and PatMcClain could potentially earn more if performance goals are reached, Genworthspokesman Tom Topinka said.”

“Hanson and McClain, the principals of Hanson McClain Retirement Planning, will takeadvisory committee positions with Genworth, Hanson said.”

“The Liberty acquisition, which closes at the end of the year, continues the trend of large,independent reverse mortgage operations being bought out. IndyMac Bancorp Inc. in2004 bought Financial Freedom. In April, Bank of America bought Seattle Mortgage,which operates Reverse Mortgage of America.”

“Wells Fargo, IndyMac Bancorp Inc. and Seattle Mortgage Co. are now the top reversemortgage companies, ahead of Liberty.”

“"A lot of companies want to get into this business," said Rich Young, Sacramento branch manager of California Reverse Mortgage. His company was bought last year byAtlanta-based Generation Mortgage Co., now the 10th-largest reverse mortgage company

in the country.”

“"There is a huge need for this product, and there is a lot of demand. The estimate is thatthere is only 1 percent penetration in the market," Young said.

““With the slowdown in regular mortgages and the fallout of subprime lending, someregular mortgage professionals are trying to do reverse mortgages, Young said.”

“"They don't realize this is a completely different business," he said.”

“Reverse mortgages are a highly specialized product. Federal law mandates a two-hour

counseling session for the person who signs the loan papers.”

“Hanson McClain has grown to $1.2 billion in assets under management. A subsidiary,the Hanson McClain Network, a marketing and transfer agent for independent retirementadvisers, has more than $3 billion in assets under management.”

The Florida Division of Corporations website shows the following related to Liberty ReverseMortgage and Genworth Financial Inc.


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April 25, 2008, Liberty Reverse Mortgage 2008 Annual Report, address change (Exhibit 38) November 17, 2008, name change to Genworth Financial, Inc. (Exhibit 39)

18. HUD Press Release, February 9, 2012: $1 Billion To Be Paid By The Bank Of America To

The Untied States, Largest False Claims Act Settlement Relating to Mortgage Fraud

Bank of America Background - Selections from Wikipedia

Bank of America Corporation is an American multinational banking and financial servicescorporation headquartered in Charlotte, North Carolina. It is the second-largest bank holdingcompany in the United States by assets. The bank's 2008 acquisition of Merrill Lynch madeBank of America the world's largest wealth management corporation and a major player in theinvestment banking market. This purchase made Bank of America Corporation the leadingmortgage originator and servicer in the U.S., controlling 20–25% of the home loan market. It hasa retail banking footprint that covers approximately 80 percent of the U.S. population and serves

approximately 57 million consumer and small business relationships at 5,700 banking centersand 17,750 ATMs.

Bank of America received $20 billion in the federal bailout from the U.S. government throughthe Troubled Asset Relief Program (TARP) on January 16, 2009, along with a guarantee of $118 billion in potential losses at the company. This was in addition to the $25 billion given to them inthe Fall of 2008 through TARP. The additional payment was part of a deal with the U.S.government to preserve Bank of America's merger with the troubled investment firm MerrillLynch. Since then, members of the U.S. Congress have expressed considerable concern abouthow this money has been spent, especially since some of the recipients have been accused of misusing the bailout money. Then CEO Ken Lewis was quoted as claiming "We are still lending,

and we are lending far more because of the TARP program."

http://en.wikipedia.org/wiki/Bank_of_America

HUD Press Release, February 9, 2012$1 Billion To Be Paid By The Bank Of America To The Untied States, Largest False Claims Act

Settlement Relating to Mortgage Fraud

“As part of the global resolution between the United States of America and the five largestmortgage servicing banks in the country, which will bring much needed relief to financiallydistressed homeowners nationwide, Loretta E. Lynch, United States Attorney for the Eastern

District of New York, today announced that the government will also resolve its claims againstthe Bank of America, Countrywide Financial Corporation and certain Countrywide subsidiariesand affiliates (Countrywide) for underwriting and origination mortgage fraud.”

“Since 2009, the office has been investigating the Bank of America's lending practices todetermine whether the bank, through Countrywide, which the bank acquired in 2008, knowinglymade loans insured by the Federal Housing Administration (FHA) to unqualified home buyers.To date, the FHA has incurred hundreds of millions of dollars in damages as a result of this


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conduct. The investigation also encompassed allegations that the bank and Countrywidedefrauded the FHA insurance fund by originating mortgage loans that were based upon inflated appraisals. During the investigation, the office determined that the bank's conduct provides a basis for affirmative civil enforcement under, among other legal remedies, the False Claims Act,31 U.S.C. §§ 3729-33.”

“As part of the global settlement, Bank of America will pay $1 billion to resolve the wrongdoinguncovered during the office's investigation” Read more at the link, or Exhibit 40.

http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2012/HUDNo.12-026

19. The Age Discrimination Act of 1975

HUD, by restricting HECM Reverse Mortgages to persons 62 years of age and older, may violatethe Age Discrimination Act of 1975, 42 U.S.C. Sections 6101-6107. Section 6101, Statement of

purpose: It is the purpose of this chapter to prohibit discrimination on the basis of age in programs or activities receiving Federal financial assistance.

HUD handbook 7610.1, Appendix D, Section IV, Clients Needs and Circumstances, Borrower’sAge: Effect on Eligibility (Page 95/181), states all borrowers must be 62 years old:

"HECMs are available only to seniors age 62 or older. Other reverse mortgage productsmay have different age requirements. All borrowers on the loan must also be on the titleand must be age 62 or older..."

HUD handbook 7610.1, Chapter 3, Section 3-1 F. Civil Rights, states “All participating agencies

must administer their housing counseling programs in accordance with and remain in compliancewith corresponding Departmental regulations and guidance and the following nondiscriminationregulatory and legislative requirements….e. The Age Discrimination Act of 1975…”

Neil Gillespie is 56 years-old and cannot qualify for a HECM loan based on his age. Therefore itappears that the HUD HECM program discriminates on the basis of age in programs or activitiesreceiving Federal financial assistance. http://www.dol.gov/oasam/regs/statutes/age_act.htm

The Bank of America is program or activity as defined by §6107(C)(I), a corporation which isextended Federal financial assistance. BofA received a $20 billion federal bailout, paragraph 18.

20. Chapter 825, Florida Statutes Abuse, Neglect, and Exploitation of Elderly Persons and Disabled Adults

Penelope Gillespie was an elderly person as defined by section 825.101(5), Florida Statutes.Ms. Gillespie suffered from Alzheimer’s dementia at the time of the HECM reverse mortgageand HUD counseling session, and lacked the capacity to make a contract. This was readilyapparent due to the inability of Ms. Gillespie to discuss basic details about this loan.Ms. Gillespie died of dementia September 16, 2009.


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Neil Gillespie is a disabled adult as defined by section 825.101(4), Florida Statutes. NeilGillespie maintained a checking and savings account at Park Avenue Bank prior to this reversemortgage. Neil Gillespie had his Social Security disability benefit payment deposited directly toPark Avenue Bank prior to this reverse mortgage. Therefore Park Avenue Bank knew that Neil

Gillespie was disabled when this reverse mortgage was made.

HUD, Susan Gray/CCCS/MMI, Liz Baize, Park Avenue Bank, Liberty Reverse Mortgage,Financial Title Company, Bank of America, and Reverse Mortgage Solutions (collectively called the “lenders”) were, or currently are, in a business relationship as defined by section 825.101(1),Florida Statutes with either Penelope Gillespie and/or Neil Gillespie, and the family trust.

The lenders had a position of trust and confidence with respect to Penelope Gillespie and NeilGillespie as defined by section 825.101(11)(c), Florida Statutes, a legal or fiduciary relationshipas our lenders. The lenders provided professional services as defined by section 825.101(13)(b),Florida Statutes.

Based on the allegations in this letter, the lenders engaged in exploitation and deception withregard to our business relationship with them as defined by section 825.101(3), Florida Statutes,(a)(1) misrepresenting or concealing a material fact relating to services rendered intended to benefit an elderly person or disabled adult; (a)(2) terms of a contract or agreement entered intowith an elderly person or disabled adult; and (b) using any misrepresentation, false pretense, or false promise in order to induce, encourage, or solicit an elderly person or disabled adult to enter into a contract or agreement.

The lender’s exploitation and deception deprived Penelope Gillespie, (and estate), Neil Gillespie,Mark Gillespie, and the Gillespie Family Living Trust, of property as defined by section

825.101(12), Florida Statutes. The value of property lost is defined by section 825.101(14).

The lenders violated section 825.103(1)(a), Florida Statutes, exploitation of an elderly person or disabled adult, knowingly, by deception, obtaining an elderly person’s or disabled adult’s funds,assets, or property to benefit the lenders who stood in a position of trust and confidence with theelderly person or disabled adult and who had a business relationship with the elderly person or disabled adult.

Under section 825.103(2)(a), Florida Statutes, the lenders may have committed a felony of thefirst degree because the funds, assets, or property involved in the exploitation of the elderly person or disabled adult is valued at $100,000 or more.

Conclusion

This complaint shows a fraudulent loan process by the lenders and affiliated parties under theHUD HECM reverse mortgage program. The information provided to Penelope Gillespie and Neil Gillespie during the HECM consumer reverse mortgage counseling was not accurate as tofinancial assumptions and projections. This practice strips borrowers of home equity and threatens families with foreclosure.


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The “FHA's Monthly Adjustable Home Equity Conversion Mortgage (HECM) Loan Estimated Amortization Schedule for Penelope Gillespie and Neil Gillespie” shows at year four (4) anending loan balance of $118,550, a home value of $163,780, and a retained equity of $45,230.(Exhibit 14.2). The actual home value today is $85,564, and the current loan balance is $108,056

per RMA’s demand letter of June 8, 2012, resulting in an equity deficit of -$22,492. The grossequity difference, as compared to the figures in Exhibit 14.2, is $67,722. (-$22,492 vs. $45,230).

Penelope Gillespie granted Neil Gillespie a life estate, the right to live in our home for the rest of his life. This life estate was verbal, not written. The HUD handbook notes on page 44 that:

"Under FHA regulations at 24 CFR Section 206.35, if a HECM borrower holds a life estatein the property that will serve as the security for the FHA-insured HECM, persons with areversionary or remainder interest in that property also must execute the HECM mortgage."

The property at 8092 SW 115th Loop, Ocala, Florida, is Neil Gillespie’s homestead under

Florida law. Neil Gillespie has lived in the home continuously since February 2005. NeilGillespie has no other home, is not married, and does not have children. Neil Gillespie has noassets to pay off the mortgage, refinance, or buy another home. Neil Gillespie’s disability incomeis below 200% of the Federal Poverty Level. If RMS successfully forecloses on our home, NeilGillespie will be homeless.

At the time of the loan we believed Ms. Gillespie’s lack of capacity was mitigated by the factthat Neil Gillespie and Mark Gillespie were also borrowers on the loan. If it is determined that Neil Gillespie and Mark Gillespie are not borrowers on the loan, then Ms. Gillespie’s lack of capacity is very significant, and the reverse mortgage is void or voidable and must be canceled.

Wherefore, in consideration of the above, the HECM reverse mortgage is void or voidable and unenforceable. Kindly cease and desist any and all foreclosure action immediately. Thank you.

Sincerely,

Neil J. Gillespie8092 SW 115th LoopOcala, FL 34481Telephone: (352) 854-7807

cc: Mark Gillespie

Enclosures: Exhibit A, attached; Exhibit B, one audio CD enclosed;Appendix 1 (Exhibits 1-21), Appendix 2 (Exhibits 22-42).


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7196

9 6

9296

216 1259

R

Reverse Mortgage Solutions Inc.

June8, 2012

SentViaCertifiedMail

PenelopeGillespie

LoanNumber: 69977

PropertyAddress: 8092SW 115THLOOP

OCALA,FL34481

NOTICE

OF

DEFAULTANDINTENT TO FORECLOSE

DearPenelopeGillespie:

ReverseMortgageSolutions,Inc.,(hereinas"RMS")iscurrentlyservicingyourmortgageloanthatissecuredby theabove

referencedproperty.You areherebyformallynotifiedIJlat themortgageloanassociatedwiththereferencedDeedof

TrustIMortgageisin defaultbecause

of

thedeath

of

theprimarymortgagorandtheloanmustbepaidinfull.

To curethisdefault,you mustforwardfundsin theamountof

1

08,056.19consisting

of

theprincipaldue,plusall interest

andfeesthroughJuly

8,

2012.

t

ispossible

that after payment

of the

amounts

detailedabovethere may

be other

feesstilldue

and

owing,including

but

not

limitedto

other

fees,escrowadvances

or

corporate advances

that RMS

paid

on your behalf or advanced to

your

account.

Thisletterisaformaldemandtopay$108,056.19. thedefaultis notpaidinfullbyJuly8, 2012,RMSwilltakestepsto

terminateyourownershipin thepropertybyaforeclosureproceedingorotheractiontoseizetheproperty.

IFYOUAREUNABLETOPAY YOURACCOUNTINFULL,RMSoffersconsumerassistanceprogramsdesignedtohelp

resolvedelinquenciesandavoidFORECLOSURE.Theseservicesareprovidedwithoutcosttoourcustomers.You maybe

eligibleforaloanworkoutplanorothersimilaralternatives.

youwouldliketolearnmoreabouttheseprograms,youmay

contacttheLossMitigationDepartmentat(866)503-5559,betweenthehours

of

8:30AMand5:00PMCST.WEARE

VERYINTERESTEDINASSISTINGYOU.

Thedefaultabovecanbecuredbypaymentof thetotalpayoffamountplusanyadditionalfeesthatbecomeduebyJuly8,

2012.Notethatadditionalcharges,costsandfeesmaybecomedueduringtheperiodbetween today 'sdateandthedatethe

aforementionedpaymentsarereceived.PleasecontactourCollectionDepartmentat(866)503-5559toobtainupdated

payoffinformation.

Pleaseincludeyourloannumberandpropertyaddresswithyourpaymentandsendto:

ReverseMortgageSolutions,Inc.

2727SpringCreekDrive

Spring,TX77373

562439 12-02121-1

Page1

of 2

A


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If

youwish

to

disputethede·linquency,or

if

youdisputethecalculation

of

amount

of

thedelinquencyandreinstatement

amount,youmaycontactusbycalling(866)503-5559.

You

havetherighttobringacourtactiontoassertthenon-existence of adefaultoranyotherdefense

to

accelerationor

foreclosuresale.Failuretorespondtothislettermayresultintheloss

of

yourproperty.Totheextentyourobligationhas

beendischargedorissubjecttotheautolnaticstayinabankruptcycase,thisnoticeisforinformationalpurposesonlyand

doesnotconstituteademandforpaymentoranattempttocollectadebtasyourpersonalobligation.If youarerepresented

byanattorney,pleaseprovideuswiththeattorney'sname,addressandtelephonenumber.

AttentionServicemembers

and

dependents:

TheFederalServiceMembers'CivilReli efAct("SCRA")andcertainstate

lawsprovideimportantprotectionsforyou,includingprohibitingforeclosureundermostcircumstances.If youarecurrently

in themilitaryservice,orhavebeenwithinthelastnine(9)months,ANDjoined aftersigningtheNoteandSecurity

Instrumentnowindefault,pleasenotifyRMSimmediately.WhencontactingRMSastoyourmilitaryservice,youmust

providepositive

proof

astoyourmilitarystatus.

If

youdonotprovidethisinformation,itwillbeassumedthatyouarenot

entitledtoprotectionundertheabove-mentionedAct.

If

youareexperiencingfinancialdifficulty,youshouldknowthatthereareseveraloptionsavailabletoyouthatmayhelp

youkeepyourhome.

You maycontactHUDGovernmentCounselingwhichprovidesfreeorlow-costhousingcounseling.

Youshouldconsidercontactingone

of these

agenciesimmediately.Theseagenciesspecializeinhelpinghomeownerswho

arefacingfinancialdifficulty.Housingcounselorscanhelpyouassessyourfinancialconditionandworkwithustoexplore

thepossibilityof

modifyingyourloan,establishinganeasierpaymentplanforyou,or evenworkingoutaperiod

of

loan

forbearance.Foryourbenefitandassistance,therearegovernmentapprovedhomeownershipcounselingagenciesdesigned

tohelphomeownersavoidlosingtheirhomes.Toobtainalist

of

approvedcounselingagencies,pleasecall(800)569-4287

orvisithttp://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.

NOPERSONINTHISOFFICE

WILL

GIVEYOUANYLEGALADVICE.If,atanytime,youmakeawrittenrequestto

usnottobecontactedbyphoneatyourplace of employment,wewill notdoso.If,atanytime,youmakea writtenrequest

to

us

nottocontactyou,wewillnotdoso,excepttosendstatutorilyand/orcontractuallyrequiredlegalnotice.

You maybe eligibleforassistancefromtheHomeownershipPreservationFoufldationorotherforeclosurecounselinga You

maycallthefollowingtoll-freenumbertorequestassistancefromtheHomeownershipPreservationFoundation:(888)995

HOPE(4637).If youwish,youmayalsocontactus directlyat(866)503-5559andasktodiscusspossibleoptions.

Thismatterisveryimportant.Pleasegiveityourimmediateattention.

Sincerely,

ReverseMortgageSolutions,Inc.

(866)503-5559

FEDERALLAWREQUIRESUS

TO

ADVISE

YOU

THATREVERSEMORTGAGESOLUTIONS,INC,ISADEBT

COLLECTORANDTHATTHISISANATTEMPT

TO

COLLECTADEBT.

ANY

INFORMATIONOBTAINEDMAY

BE

USEDFORTHATPURPOSE.

TO THE

EXTENTYOUROBLIGATIONHAS

BEEN

DISCHARGED

OR

ISSUBJECT

TO

THE

AUTOMATICSTAYINABANKRUPTCYPROCEEDING,THISNOTICEIS FOR INFORMATIONAL

PURPOSESONLYANDDOESNOTCONSTITUTEADEMAND

FOR

PAYMENT

OR

ANATTEMPT

TO

COLLECT

ANINDEBTEDNESSAS YOUR PERSONALOBLIGATION.IF YOUAREREPRESENTED

BY

ANATTORNEY,

PLEASEPROVIDEUS

WITH THE

ATTORNEY'SNAME,ADDRESSANDTELEPHONENUMBER.

562439

12-02121-1

Page2

of2


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APPENDIX I

Gillespie Complaint to HUD, August 9, 2012

U.S. Department of Housing and Urban Development (HUD)

RE: Reverse Mortgage Solutions, acct./loan no. 68011002615899

Exhibit 1 Assignment of Mortgage to Reverse Mortgage Solutions, Mar-27-2012

Exhibit 2 Assignment of Deed to Bank of America, Jun-03-2008 (unlawful)

Exhibit 3 Notice of Assignment, Sale or Transfer, Servicing Rights, Jun-03-2008 (unlawful)

Exhibit 4 Direct Endorsement Allonge, to Bank of America, May 29, 2008 (unlawful)

Exhibit 5 Residential Loan Application for HECM Reverse Mortgage, June 5, 2008

Exhibit 6 Financial Title Company, Borrower's Escrow Instructions, May 28, 2008

Exhibit 7 Residential Loan Application for HECM Reverse Mortgage, April 25, 2008

Exhibit 8 Park Ave. Bank, Liz Baize letter with documents to Neil Gillespie

Exhibit 9 HECM First Mortgage, June 5, 2008, WITHOUT interlineation

Exhibit 10 HECM Second Mortgage, June 5, 2008, WITHOUT interlineation

Exhibit 11 HECM First Note, June 5, 2008

Exhibit 12 HECM Second Note, June 5, 2008

Exhibit 13 Quit-Claim Deed, June 5, 2008

Exhibit 14 Certificate of HECM Counseling package, Susan Gray-CCCS-MMI, Apr-23-2008

Exhibit 15 Certificate of HECM Counseling, signed, April 25, 2008

Exhibit 16 The Reverse Mortgage Analyst, April 25, 2008

Exhibit 17 Liberty Rev. Mort, Re-disclosed Calculations, May 16, 2008

Exhibit 18 The Reverse Mortgage Analyst, June 5, 2008

Exhibit 19 Financial Title Co., Buyers-Borrower's Closing Statement, FINAL, May-29-2008

Exhibit 20 HUD Buyers-Borrowers Closing Statement, Faxed, Fatima Pacheco, May 28, 2008

Exhibit 21 Richard T. Kwiatkowski, business card, Have Seal - Will Travel, LLC.


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APPENDIX II

Gillespie Complaint to HUD, August 9, 2012

U.S. Department of Housing and Urban Development (HUD)RE: Reverse Mortgage Solutions, acct./loan no. 68011002615899

Exhibit 22 HUD final settlement statement, HECM, June 5, 2008

Exhibit 23 Email from Liz Baize, Park Ave Bank, problem with documents, June 10, 2008

Exhibit 24 HECM Notice of Right to Cancel, June 5, 2008

Exhibit 25 Fax to RMS, dispute the delinquency and foreclosure, June 19, 2012

Exhibit 26 Bank Failure, Geoorgia Dept. Banking closed Park Ave. Bank, April 29, 2011

Exhibit 27 FDIC, receiver for Park Ave. Bank, April 29, 2011

Exhibit 28 FDIC, Park Ave. Bank, Consent, 09-084-WA/RB-HC-SM, July 14, 2009

Exhibit 29 San Jose Business Journal, Financial Title Shuts Down, July 30, 2008

Exhibit 30 Genworth lures Liberty Reverse Mortgage with $50 million, July 29, 2007

Exhibit 31 Durable Power of Attorney, Neil Gillespie, February 21, 2006

Exhibit 32 HECM Mortgage, with INTERLINEATION

Exhibit 33 HECM Second Mortgage, with INTERLINEATION

Exhibit 34 Tom DeBeauchamp, BofA FedEX label, January 15, 2009

Exhibit 35 Negative growth reimbursement check, $38.89, January 6, 2009

Exhibit 36 Reimbursement check, $133.38 January 6, 2009

Exhibit 37 Letter, Karen Yantis, BofA, RE: Negative Growth, January 14, 2009

Exhibit 38 Liberty Reverse Mortgage, Fla. Div. Corp., 2008 Annual Report

Exhibit 39 Liberty Reverse Mortgage, Fla. Div. Corp., 2008 name change to Genworth

Exhibit 40 HUD: $1 BILLION TO BE PAID BY THE BANK OF AMERICA

Exhibit 41 HUD Rev. Mortgage Handbook, B.10 Reviewing Client’s Level of Understanding

Exhibit 42 General Allegations, HUD, breach of Fiduciary Duty, Predatory Lending

HUD-HECM Complaint Notice of Default-Intent to Foreclose

Documents

Transcript of HUD-HECM Complaint Notice of Default-Intent to Foreclose