Title insurance giant First American Financial Corp. has filed a federal lawsuit against embattled reverse mortgage servicer Novad Management Consulting LLC, alleging breach of contract while seeking to recoup more than $1.6 million in unpaid fees plus interest.

First American and an affiliated mortgage services provider, First American Mortgage Solutions LLC, filed the complaint in the southern division of the U.S. District Court for the District of Maryland on March 30, requesting that the court issue a writ of attachment that would effectively freeze Novad’s bank accounts and assets pending ongoing arbitration.

Alternatively, the plaintiffs seek injunctive relief against Novad to prevent the firm from concealing or otherwise absconding with assets “to avoid paying the funds owed to First American that First American expects to be awarded in arbitration,” the lawsuit reads.

The dispute arose following work that the First American companies performed for Novad under contract in 2022, while Novad was under contract with the U.S. Department of Housing and Urban Development (HUD) to service reverse mortgages.

The mortgages serviced by Novad were federally insured home loans backed by the Federal Housing Administration (FHA), known as home equity conversion mortgages (HECMs), that enable homeowners age 62 and older to convert equity in their home to cash or a line of credit.

HUD, which oversees the FHA, terminated its contract with Novad in December 2022, court filings indicate, amid contract disputes. After the plaintiffs issued a default notice to Novad in September 2023, they claim that Novad “assured First American that it was suing HUD for payment and would pay First American once it got paid by HUD.”

First American claims that Novad then failed to inform the company that it had entered into a settlement with HUD on Sept. 18, 2025, and had been paid by HUD according to the settlement sometime around January 2026.

“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,” alleges the lawsuit. During that period, Novad was also being investigated by the Consumer Financial Protection Bureau (CFPB) for engaging in deceptive reverse mortgage practices.

Novad admitted to engaging in fraud and entered into a consent order by the CFPB in June 2024, which First American claims was never represented during negotiations for repayment. The consent order says Novad serviced between 49,000 and 150,000 HECMs annually from 2014 to 2022.

Despite causing what the CFPB assessed as $11.5 million of harm to affected borrowers, Novad and its CEO, Everett Davon Kelly, swore an inability to pay that amount, resulting in a civil penalty of $1 paid to the bureau. Novad has been permanently banned from engaging directly or indirectly in any kind of reverse mortgage lending or servicing activities.

The First American companies have initiated arbitration proceedings with the American Arbitration Association, as laid out in the original master services agreement that Novad is alleged to have breached. A spokesperson for the First American companies declined to comment, citing active litigation.

Requests for comment sent to multiple email addresses associated with Novad Management Consulting went unreturned. A voicemail left with Kelly also received no response.