We get a lot of angry calls from family members of elderly homeowners who feel tricked by false advertisements from reverse mortgage lenders. We still remember those TV commercials by Tom Selleck touting all the benefits of reverse mortgages without disclosing the risks. Finally, we have some good news to report. The government is pushing back.
A Manhattan federal jury convicted the millionaire owner of a reverse mortgage company with fraud and criminal conspiracy. The charges were related to a scheme to “jack up” the company’s bond valuation. Prosecutors say that Live Well Financial founder Michael Hild took $24 million from the company before it went under.
Live Well Financial was founded by Michael Hild in 2005. Within a decade it was a leader in the reverse mortgage industry (also known as Home Equity Conversion Mortgages). A reverse mortgage allows elderly homeowners to borrow against the equity in their home. If done right and in the right circumstances, it allows seniors to increase their spending power. Often the only amounts that need to be paid are taxes and insurances. There are no payments on the loan until you permanently leave the home.
As Live Well increased its loan portfolios, it relied on financing from banks including an FDIC insured lender in Michigan. (The feds did not publish the name of the lenders who provided financing to the company – we believe the bank is Flagstar Bank.)
To obtain bank funding, Live Well was required to provide audited financial statements. Prosecutors say that Hild signed documents representing the fair value of the company’s assets. Those statements were provided to both lenders and HUD. The values were inflated and not accurate.
When the company needed more cash, Hild directed employees to inflate values even more.
The scheme came to a screeching halt when one of the lenders decided to secure their own independent valuation. That occurred in September 2018 and almost immediately creditors realized they had been duped. On May 4th, 2019 the company closed its doors.
Hild was indicted in August on bank and wire fraud charges. In April 2021 the case went to trial. Hild blamed others in the company and the economy. Despite taking $24 million out of the company and transferring $17 million to his wife, Hild said he was simply “along for the ride.”
A jury of 12 men and women didn’t buy his story. He was convicted on several counts and faces sentencing later this year. He faces 115 years in prison but typically sentences for first time offenders are much lower.
After the conviction was announced, Manhattan U.S. Attorney Audrey Strauss said,
“As a unanimous jury found, Michael Hild obtained millions of dollars in secured loans for Live Well Financial by grossly inflating the value of bonds used as collateral. Hild deceived a third-party pricing service by providing it with inflated marks, resulting in the pricing service publishing valuations for the bonds far in excess of market value. Lenders were hoodwinked into lending far more than they otherwise would have. The house of cards came crashing down with the unwinding of Live Well and the revelation to lenders that the bond portfolio had been overvalued by $200 million. Now, Michael Hild awaits sentencing for his crimes.”
Whistleblower Rewards for Reverse Mortgage Company Fraud
The whistleblower lawyers at Mahany Law have long championed efforts to curb fraud against seniors and particularly, fraud involving reverse mortgages. Those efforts were mostly sidelined after Dr. Ben Carson became secretary of the Department of Housing and Urban Development. Unfortunately for consumers and whistleblowers,
As of March 10, 2021, Marcia Fudge became the newest HUD secretary. We anticipate that the department will once again welcome whistleblower reports and crackdown on lenders who prey on the elderly.
Typically, bad mortgage lenders are prosecuted under the federal False Claims Act. That law allows whistleblowers with inside information about fraud involving federal funds or programs to collect large cash rewards. Because HECM’s are insured by HUD, rewards are available.
Rewards range between 15% and 30% of whatever the government collects from the wrongdoer. The typical reward is approximately 20%.
To learn more about reverse mortgages and whistleblower rewards, visit our special HECM reverse mortgage whistleblower page.
The case against Michael Hild was an outlier. Although a top 10 reverse mortgage lender, most of Live Well Financial’s customers were not irreparably harmed. They may have been inconvenienced but Hild’s fraud was felt by banks, its lenders.
If the Justice Department is correct, Hild is guilty of a $200 million bond fraud. That doesn’t trigger a False Claims Act reward but rewards are still available.
Information about public companies that cook their books may trigger an SEC whistleblower reward. The SEC routinely pays rewards to those who report information about companies that artificially inflating asset values. And unlike other whistleblower programs, it is very easy to remain anonymous under the SEC whistleblower program.
Do you remember when we said that one of the banks hurt by Living Well’s inflated asset values was an FDIC insured bank from Michigan? That little fact is important. Anyone that defrauds a federally insured bank or credit union may be guilty of violating the Financial Institutions Reform, Recovery and Enforcement Act. FIRREA for short.
Congress passed FIRREA after the savings and loan crisis in the 80’s. Inside information about companies or individuals jeopardizing the safety of banks could make you eligible for a FIRREA bank fraud reward of $1.6 million.
Ready to see if you qualify for a reward? Contact the Mahany Law whistleblower lawyers online, email or by phone 202-800-9791. Cases accepted nationwide and are accepted on a contingency fee basis meaning we only get paid if you get paid.