Why Reverse Mortgage Servicers Are Facing Renewed Scrutiny in 2026

Reverse mortgage litigation in 2026 is spreading across servicers, law firms, and legal theories, with each new filing describing a different mechanism for the same underlying problem: older homeowners and their heirs losing home equity, or the home itself, to practices regulators say the rules were written to prevent.

The AARP Fee-Padding Case

The most visible case is the AARP Foundation’s January 2026 class action against Compu-Link Corporation (Celink), Finance of America Reverse, and Carrington Mortgage Services, with a motion since filed to add Longbridge Financial as a defendant. That suit centers on fee padding: attorney’s fees, inspection fees, preservation fees, and appraisal charges billed above what HUD permits, then buried in a loan balance where borrowers rarely see them until the loan comes due.

A Different Servicer, Same Vulnerability

A second case, filed roughly two months later and involving a different servicer entirely, shows the same underlying vulnerability from a different angle. Kendall-Mayo v. Department of Housing and Urban Development, filed March 23, 2026, in the U.S. District Court for the Eastern District of Virginia, names HUD, PHH Mortgage Corporation (a subsidiary of Onity Group), Mortgage Assets Management, and MetLife Home Loans as defendants. The case involves a HECM originated in 2011, before HUD extended automatic foreclosure protection to non-borrowing spouses on loans issued after August 2014. When the borrower died in December 2024, his widow, who was never named on the loan, wasn’t covered by that protection. The estate’s executor tried to use HUD’s Mortgagee Optional Election program to keep her in the home; the complaint alleges Mortgage Assets Management refused and PHH relayed the refusal. The home was foreclosed and sold in June 2025 despite the family’s efforts to stop it.

Where the AARP case alleges servicers billed borrowers for costs the rules prohibit, the Kendall-Mayo case alleges HUD never closed a regulatory gap that two prior federal court rulings, Bennett v. Donovan and Plunkett v. Castro, had already found in violation of congressional intent. It’s the exact fee-ethics blind spot regulators are only now catching up to. Different servicer, different legal theory, same structural weakness: a program built to let seniors age in place without displacing their spouse, administered in a way that leaves both borrowers and their families exposed at the exact moment they can least absorb the loss.

Not the First Time

Neither case is the first of its kind. AARP Foundation attorneys, working with the same law firms behind the 2026 suit, brought a nearly identical fee-padding case against Celink and the bankrupt servicer Reverse Mortgage Funding back in 2022. That case alleged the same four categories of prohibited charges years before the current complaint named them again. That earlier case took years to move through discovery after RMF’s bankruptcy filing delayed proceedings, a reminder that even a well-documented complaint against a reverse mortgage servicer can take years to resolve.

A Pattern Across Every Case

What connects the 2026 cases is a pattern of plaintiffs: estates, executors, and surviving spouses, almost never the original borrower, who discover the problem only after death has already put the loan in motion. HUD’s own program design assumes a borrower and, where applicable, a spouse who understand exactly what happens to the loan balance and the home once they’re gone. Both 2026 complaints argue that assumption is failing in practice, just through different mechanisms: one through fees baked into the balance without the borrower’s knowledge, the other through a regulatory gap that surfaces only after the person who could have fought it is no longer alive to do so.

Both cases remain in early stages. The AARP Foundation suit hasn’t been certified as a class, and the Kendall-Mayo case hasn’t moved past its opening pleadings, with HUD, PHH, and the other named defendants yet to file a substantive response. Whatever their outcomes, the two complaints together suggest 2026 is becoming a year of accumulating scrutiny for reverse mortgage servicing rather than a single resolved dispute. Each new filing adds another documented instance of the same borrowers, and the same vulnerability, in a different courtroom.