Live Well Financial, the once-prominent reverse mortgage lender that shut down abruptly May 3, has already been sued for allegedly failing to pay employees – and now it may be in even deeper trouble. Michigan-based Flagstar Bancorp said in a recent regulatory filing that a borrower owes it $74 million – and while Flagstar didn’t name the borrower, it appears to be Live Well, according one industry expert.
Kevin Barker, a senior research analyst with Piper Jaffray, told The Richmond Times-Dispatch that he believes the unnamed borrower is Live Well Financial.
In its regulatory filing, Flagstar said that it “became aware that one of our commercial borrowers was unexpectedly ceasing their reverse mortgage origination business.”
“While it is too early to determine the extent of the loss we may have on this loan, we plan to pursue all available sources of collection including other assets of the company, a personal guarantee and other legal remedies to minimize our credit exposure related to this loan,” Flagstar said in the filing.
Barker said that the unnamed borrower seems to be Live Well based on the timing.
“No other reverse mortgage company closed between April 23 and when (Flagstar) filed their 10-Q on May 10,” he told the Times-Dispatch.
Flagstar said the debt includes a $69 million commercial loan and a $5 million warehouse loan.
Live Well ceased operations without explanation earlier this month, merely posting a notice on its website that “unexpected circumstances” had forced it to halt originations. This week, a former Live Well employee filed a lawsuit against the company in federal court, claiming that she and other laid-off employees had not been payed what they were owed.