Benutech study finds 22 percent of reverse mortgages have title errors

Brian Fox, the chief revenue officer at Benutech, recently pulled back the curtain on a massive blind spot in the mortgage industry. He analyzed 35,000 active reverse mortgages and found that many lenders have no idea who actually owns the homes they are financing. In a standard scenario, a borrower might add a child to a title or move a property into a trust without the lender ever knowing. Benutech compared these servicing records against real-time public title data to see if they matched. The results were startling. More than 3,600 loans received a D grade for major discrepancies, while nearly 4,000 loans got an F grade because the active borrower was not even on the title. In some cases, the borrower had died or sold the home years ago, and the servicer remained completely unaware. Fox noted that some states like Florida saw mismatch rates as high as 29 percent. This creates a massive risk if a homeowner falls behind on Homeowners Association dues. In 20 states with so-called super-lien laws, an HOA can foreclose and wipe out a mortgage lender’s entire claim. If you hold a reverse mortgage, verify that your title and servicing records are perfectly aligned. You do not want to be the one caught in a legal battle with the Department of Housing and Urban Development when the truth finally comes out. It is a reminder that in business, if you rely on self-reported letters instead of hard data, you are essentially flying blind.