EverBank Filed 11 Ineligible Preforeclosure Sales Claims: Report

EverBank failed to properly determine mortgagor eligibility for the Federal Housing Administration's preforeclosure sale program, according to an audit report released by the inspector general for the Department of Housing and Urban Development.

Out of 17 claims that mortgagors filed with EverBank, the lender submitted 11 ineligible preforeclosure sales claims, the HUD-OIG's office determined.

The preforeclosure sales program allows mortgagors who cannot make their mortgage payments because of an unavoidable financial situation sell their property at fair market value. The sale proceeds will then satisfy the mortgage debt even if the proceeds are less than the amount owed.

EverBank allegedly failed to adequately assess a mortgagors' financial information to ensure their FHA loan defaulted due to an adverse financial situation, the report revealed.

Additionally, the company did not conduct an independent verification of the mortgagors' income, claimed expenses and personal resources to determine if they had the ability to pay the FHA-insured mortgage.

Lastly, the report said EverBank allegedly did not substantiate that mortgagors' need to vacate the FHA-insured property was due to the cause of the default.

These actions occurred, according to the report, because EverBank's interpretation of the program was not in accordance with HUD requirements. As a result of these supposed inaccurate calculations, the FHA insurance fund paid nearly $1.6 million in improper claims for the 11 preforeclosure sales claims, including lender and mortgagors incentives, the report said.

EverBank in Jacksonville, Fla., was audited because the company had the highest preforeclosure sale claims of all servicing lenders in the state.

Furthermore, more than 50% of its Florida FHA claims were from preforeclosure sales with more than $12.9 million paid from 2011 through 2013, the report said.

The HUD-OIG is recommending that EverBank reimburse HUD for the ineligible preforeclosure sale claims. HUD-OIG also wants the company to develop and implement policies in accordance with HUD requirements to determine mortgagor eligibility for the program.

EverBank's Vice President Babacar Ba wrote a letter in the report regarding these allegations and said that the lender "takes its responsibilities under the FHA program seriously."

"We are dedicated to working with HUD to provide FHA borrowers with efficient service and, when delinquencies arise, to providing loss mitigation in a timely manner when such options are available," Ba continued.

"We would never knowingly violate FHA requirements nor endanger the reputation of the company or its employees. Specifically related to delinquent loans and loss mitigation practices, EverBank's goal is, and has always been, to act in the best interests of our customers within the parameters of HUD's loss mitigation programs and the borrowers' financial conditions."

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