Stop CFPB's illegal foreclosure-exemption for HUD-Servicer NOVAD

On January 12, 2018, after nearly a month of research, during which time an anonymous CFPB staff member apparently contacted HUD, the CFPB Ombudsman's Office responded by email: "our understanding is that the CFPB does not currently process consumer complaints involving NOVAD. Moreover, our understanding is that NOVAD is a servicer of HUD loans." If, as seems apparent from the facts, HUD has asked the CFPB not to enforce Dodd-Frank with regard to NOVAD, HUD has directed the CFPB to ignore the will of Congress.

Novad Management Consulting ("NOVAD") is the servicer for HUD's Secretary-Held Home Equity Conversion Mortgages, called "HECMs" or "reverse mortgages". When a homeowner with a reverse mortgage dies, NOVAD is required by federal law to obtain an appraisal and provide a payoff balance at which an heir, or a third party, can purchase the property. NOVAD repeatedly refuses to return letters and phone calls from heirs (see, e.g., https://www.bbb.org/oklahomacity/business-reviews/business-consultant/novad-management-consulting-in-oklahoma-city-ok-90043337/reviews-and-complaints?section=reviews). Often, NOVAD does not initiate foreclosure on the home for many months, or even years, during which time NOVAD continues to collect servicing fees from HUD. By refusing to sell these homes without delay, as federal law requires, NOVAD is collecting unnecessary servicing fees from HUD (which may constitute a false claim against the United States). NOVAD is also violating Dodd-Frank by refusing to provide heirs with a payoff balance as required by RESPA:

Error resolution procedures in RESPA, 12 C.F.R. § 1024.35, define a mortgage servicer's responsibilities for responding to a qualified written request ("QWR"). Section 1024.35(d) requires the servicer to provide a borrower with written acknowledgment of receipt of a QWR within five days, excluding legal public holidays, Saturdays and Sundays. Section 1024.35(b)(6) refers to § 1026.36(c)(3) for the requirement that a servicer furnish an accurate statement of the total amount that would be required to pay the consumer's obligation in full, for "a reverse mortgage … within a reasonable time."

Congress made no exemption in the Dodd-Frank statute for NOVAD, or for any other servicer of HUD loans. HUD staff have apparently conspired with CFPB staff to exempt NOVAD in violation of the Dodd-Frank statute. This is not only illegal but unfair: First, any private bank or servicer would be investigated by CFPB and large fines would be imposed if they had acted as NOVAD has; Second, by exempting NOVAD from investigations and fines, CFPB is providing a subsidy to NOVAD worth millions of dollars, which is an unfair business advantage that is not available to private banks or servicers, which do not have HUD as a powerful ally.

This petition is to ask CFPB Acting Director Mick Mulvaney to: (1) Stop the CFPB from providing any illegal exemption for HUD's servicer NOVAD; (2) Investigate NOVAD for their violations of Dodd-Frank, from September 2014 to date, imposing the same fines on NOVAD that would have been imposed on any other private servicer; (3) Have CFPB implement a policy to investigate NOVAD, and any future HUD servicer, requiring compliance with Dodd-Frank (just as every other private servicer must comply).