First American sues Novad, seeks to freeze assets over $1.6M reverse mortgage dispute

First American Title Insurance Co. and First American Mortgage Solutions LLC have filed a federal lawsuit against Novad Management Consulting LLC, alleging breach of contract and seeking to secure more than $1.6 million in disputed payments tied to reverse mortgage services.

The complaint, filed March 30 in the U.S. District Court for the District of Maryland, asks the court to issue a writ of attachment against Novad’s bank accounts or, alternatively, grant injunctive relief to prevent the company from moving or dissipating assets while arbitration proceedings are pending.

First American alleges Novad failed to pay for lien release and related services performed in 2022 under a master services agreement tied to Novad’s contract with the U.S. Department of Housing and Urban Development (HUD).

The lawsuit comes as Novad is already under scrutiny from the Consumer Financial Protection Bureau (CFPB), which in 2024 ordered the company to pay roughly $11.5 million in restitution to borrowers and barred it from reverse mortgage servicing after finding it engaged in deceptive practices.

First American claims that Novad attributed its nonpayment to a dispute with HUD and said it would pay once it recovered funds from that litigation. The plaintiffs claim they agreed to delay collection efforts based on those assurances.

However, the complaint alleges that Novad later settled with HUD in September 2025 and received payment by early 2026 but did not inform First American and stopped responding to communications.

First American says Novad failed to disclose the 2024 enforcement action, along with its subsequent settlement with HUD, while assuring it would repay outstanding debts, a claim that now underpins its effort to secure more than $1.6 million through arbitration and the courts.

According to the complaint, Novad stopped making payments in February 2023 and has not disputed the outstanding balance, which exceeded $1 million as of September 2023. With accrued interest, the total amount sought has grown to $1,628,573.38.

“Despite repeated inquiries from First American in late 2025 and early 2026, Novad has refused to respond, concealed its settlement with HUD, concealed the payments it received from HUD, and has otherwise concealed its assets from First American,” the suit states.

The lawsuit further claims Novad “fraudulently induced” First American to forbear collection while concealing both the HUD settlement and its financial condition, raising concerns that the company could move or hide assets.

Neither First American nor Novad immediately responded to requests for comment from HousingWire‘s Reverse Mortgage Daily.

The plaintiffs have initiated arbitration through the American Arbitration Association, as required under their contract, and say they expect to obtain an award for the full amount. The federal lawsuit seeks to preserve Novad’s assets in the meantime to ensure any eventual judgment can be collected.