Hurricane Alert – 5 Tips if You Have a Reverse Mortgage

October 7, 2016

HECMs and Hurricanes

As Floridians and East Coast residents brace for Hurricane Matthew, the strongest system to threaten the United States since Katrina in 2005, we asked two knowledgeable servicers for advice that you can share with your clients if their homes are damaged.

Ryan LaRose, President and COO of Lansing, MI-based Celink, and Co-Chairman of NRMLA’s Servicing Committee, and Leslie Flynne, COO of Reverse Mortgage Servicing at Reverse Mortgage Solutions, offer these tips:

Contact your insurance company right away to file a claim if damage has occurred to your home;
After that, contact your loan servicer to inform them if damage has occurred to your home; and
Depending on the severity of the damage, and the amount of funds issued by your insurance company, it may be necessary for the servicer to hold the insurance funds, monitor the progress of the repairs, and disburse out to the contractor (similar to a repair set aside) after an inspection has been completed on the home.
If you had damage and need to move out of your property, update your contact information with your servicer and provide an alternate contact in the event that your servicer has difficulty reaching you.
If you had no damage, but you are going to be away from your home for a pro-longed period of time, let your servicer know.

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9 Comments on this Article

Wynter
November 17th, 2021

Hi Arlo,

My parents have a house that has novad management. Hurricane Michael left major damage. We had to sue insurance company to get funds to repair their home. Now that we have the funds I can't get ANYONE to answer the phone. Novad has the funds in their account and I have contractors lined ready to work. I was on hold for over 4 hours yesterday calling 877 622 8525. It's the loss and draft area that I need to get to. I have all documents they need ready. Have any ideas?
Reply to Wynter
- Michael Branson
  November 17th, 2021
  
  Hello Wynter,
  Unfortunately, I do not have a magic formula that is guaranteed to work but I do recommend a few things. Firstly, consider obtaining legal counsel if this continues. Secondly, send a registered letter to NOVAD now with a copy to HUD. Finally, you can contact agencies like the Consumer Finance Protection Bureau and file complaints. Keep on them but make sure your efforts are documented so you can justify and claims you make later.
  I can't give you legal advice and do not know what the laws in your state require the lender to do so I really think you should consider a conversation with an attorney who specializes in this area if this continues, especially if the home is uninhabitable and NOVAD is stopping you from fixing it.
  Reply to Michael
Tandy W.
July 23rd, 2019

If I have a reverse mortgage and I file a hail damage claim will they withhold the money?
Reply to Tandy
- Michael Branson
  July 23rd, 2019
  
  Hello Tandy,
  
  The reverse mortgage is just like any other loan in this respect. The lender is listed as an "other insured party" on the insurance policy. The check will be made payable to both you and the lender when the claim is paid.
  The lender will send out an inspector or may just need the work completion from the company that completed the repairs and a picture showing the work has been done, usually depending on the nature of the damage and the cost of the repairs. They will sign off on the check so that you can complete the payment for the damage repair.
  This is standard for all lenders when a claim needs to be paid so that the lender can be certain that the homeowner does not take the funds and use them for something else while allowing the property to fall into disrepair. But they don't withhold any money, they simply make sure that the repairs are completed before signing off on the insurance proceeds.
  Reply to Michael
Shivon C.
July 12th, 2019

I'm an heir of a reverse mortgage Hurricane Florence damaged property can't find financing to redeem property can the debt be discharged/remitted.
Reply to Shivon
- Michael Branson
  July 12th, 2019
  
  Hello Shivon,
  
  First and foremost, I would suggest you find out who insured the property. Most lenders required proper insurance that were in hurricane prone areas and if I remember correctly, Florence was in a known hurricane area. So, with any luck, there should be coverage for any damage.
  Next I would contact the lender and let them know that you are in the process of repairing the property so that it can be refinanced or sold, whichever you plan to do. If you don't do it, the lender or HUD is going to file the insurance claim after they foreclose and then when the property is repaired, they will sell the home and if there is any equity remaining, you should be the one to benefit from it.
  Reply to Michael
Barb
March 26th, 2019

Who gets the check from the insurance company for a home damage on a reverse mortgage?
Reply to Barb
- Michael Branson
  March 26th, 2019
  
  Hi Barb,
  
  Just as with any home on which there is a loan, the lender is included on the insurance policy as "additional insured". The check will be made payable to you and the lender, on a reverse mortgage or a forward loan. The check would go to you and you will have to get the lender to sign off on the check.
  Depending on the nature and extent of the damages, the lender may want to do a property inspection before signing off on the check. If it is a small amount and the damages are not significant, they may allow you to just send a picture of the repairs. If the damages are structural or high dollar, they will probably require an inspection before they release the funds.
  Reply to Michael
Samson Parker
October 9th, 2016

It's obvious that hurrican mathew creates record-breaking flooding and damage to homes and businesses. But, I must say the tips you offered at Reverse Mortgage Solutions are quite helpful for all. From the given PDF, I come to know about the reverse mortgage borrower's occupancy requirements. Thanks!
Reply to Samson

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Hurricane Alert – 5 Tips if You Have a Reverse Mortgage

HECMs and Hurricanes

Have a Question About Reverse Mortgages?

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