The complaint stems from a Home Equity Conversion Mortgage (HECM) that Cleveland Mayo obtained in June 2011 after being diagnosed with kidney failure. According to the lawsuit, Mayo believed the loan would allow either him or his wife to remain in the home after the other’s death.
But the suit points out that while reverse mortgage statutes require borrowers to receive counseling from HUD-certified counselors, HUD did not require the non-borrowing spouse to receive such counseling until August 2011.
After Cleveland Mayo died in December 2024, the loan was declared due and payable, and the home was foreclosed upon in June 2025 and sold to Cascade Funding Mortgage Trust. Cascade is also named as a defendant, despite repeated efforts by family members to halt the process.
“Between 2011 and until and 2025, neither Mr. Mayo nor Mrs. Mayo received any communication or document that gave them reason to believe Mr. Mayo’s death would result in the displacement of Ms. Mayo,” the suit states.
The suit alleges that despite Cleveland’s estate trying to use the Mortgagee Optional Election (MOE) program, which lets non-borrowing spouses remain in the home if the mortgage is assigned to HUD, Mortgage Assets Management refused and PHH, as the mortgage servicer, relayed that refusal.
The lawsuit challenges how HUD administers its federally insured reverse mortgage program. The plaintiffs argue federal law requires protections for surviving spouses, even if they are not listed as borrowers, and accuse HUD of failing to fully implement those protections for loans issued before 2014.
“Many non-borrowing spouses are still, contrary to Congressional intent, being forced to vacate their home,” the complaint states. “HUD’s regulations did nothing to protect widows or widowers.”
The suit also alleges fraud against the original lender, claiming a representative misled Cleveland about the loan’s terms, and accuses PHH of violating the Real Estate Settlement Procedures Act (RESPA) by failing to adequately respond to requests for information.
The plaintiffs are seeking to undo the foreclosure, reform the loan to allow Kendall-Mayo to remain in the home, and to obtain damages and other relief.
Neither HUD, PHH Mortgage Corp., Mortgage Assets Management LLC and MetLife Home Loans immediately responded to requests for comment from HousingWire‘s Reverse Mortgage Daily.
