Hello Vao,This is a very timely issue that many homeowners are facing - especially those with mortgages. All home loans, not just reverse mortgages, require borrowers to maintain homeowner's insurance. That's because lenders need to ensure that if a fire or other disaster occurs, they're not left with no collateral securing the loan.Unfortunately, in many parts of the country, maintaining coverage has become increasingly difficult due to rising premiums and stricter underwriting standards. So, what should you do?The best option is usually to keep your home insured through a traditional insurance company at the lowest available rate. I understand you've already invested money to meet their repair requirements, and now they're asking for more. But you'll want to weigh the cost of completing those additional repairs against the much higher premiums you could face if they cancel your policy and you're forced to use a last-resort insurance provider, such as the California FAIR Plan. (Although not government-provided, this type of coverage is backed by a consortium of private insurers and overseen by a board that includes the state insurance commissioner.)While plans like these can provide the coverage needed to meet lender requirements, they're typically much more expensive and offer limited coverage. So, if the required repairs are a one-time, manageable expense, you're likely better off completing them to preserve your current policy.If you have time, it's a good idea to shop around with other insurance companies to see if any have less restrictive requirements. With only a couple of weeks, time is limited, but try reaching out to family, friends, or neighbors for recommendations on good local agents. A knowledgeable agent who moves quickly and communicates honestly can help you assess your real options. You may find that your current company is actually the most difficult to work with - and a change could benefit you. Or, you might find they're the best fit, and making the repairs is the right move. A trusted agent might even be able to refer you to affordable contractors for any required work.If you're active in your church or community groups, you might also look into local assistance programs. There are also HUD and nonprofit repair assistance programs, though with your short timeline, they may not move fast enough - but they're worth exploring if you anticipate future repairs will be needed to keep coverage intact.Bottom line: If you have a home with any kind of loan, including a reverse mortgage, you are required to maintain homeowner's insurance. That's a key consideration for any borrower. In your case, the immediate goal is to avoid cancellation and keep your current coverage in place so the lender doesn't call the loan due. Once that's secured, you can focus on long-term solutions to keep your coverage affordable.

Hello Yvonne,Did she mention the company name of the servicing department and use your loan number, or did she just use the generic term "servicing department"? This could be a phishing call, and she may be trying to sell you something. If so, it is not a very ethical way to start a conversation. If she is with your lender or with a company that services your loan, she should properly identify herself and give you adequate information to confirm that she is servicing your loan either as your lender or as a company contracted by your lender. I suspect that she is not an employee of or authorized by your lender to contact you about your current loan, which means she is likely trying to get you to refinance your current loan.Now, that may not be a terrible thing. If you got your loan at a time when HUD charged 1.25% for renewal fees, the current renewals are 0.50% for loans closed today. You may be able to get more money on a refinance as well, but my advice to you is not to jump at the first offer. Get a few proposals and compare them. If a refinance will be beneficial for you, it never hurts to find out if the offer this person is making is the best one available. Sometimes you can do much better by comparing different lenders. Lowering the mortgage insurance on your loan may not be the best option for you if better terms are available now, and the only way to know for sure is to shop and compare.One easy way to do that is to visit online calculators like the one on our site. Because HUD allows borrowers credits on the initial mortgage insurance based on the amount they paid on their last loan, calculators can't always be totally accurate for refinance transactions for upfront fees because they need to know what you paid on your last reverse mortgage. So, don't be afraid to talk to some originators so they can give you an accurate quote. If you speak to a good company like ours, we will be happy to give you the numbers without any pressure and without requiring you to provide your social security number or other personal information (other than birthdates, which are needed to determine your benefits). Then you can decide if a refinance is best for you.

Hello Sloan,Your Up-Front Mortgage Insurance Premium (UFMIP) for the first time you close a reverse mortgage on your home is 2% of the property value or the HUD maximum lending limit, whichever is less. Your second and subsequent loans use a formula that we will go into below to determine how much you will pay that takes into consideration how much UFMIP you paid on the reverse mortgage you closed just before the one you are closing at that time and then give you credit for UFMIP paid on the prior loan. The first time you refinance a HECM with a new HECM loan, HUD will give you credit for the UFMIP you paid on your first loan. This credit is usually large enough so that the first refinance for most borrowers allows them to pay very little to no UFMIP on that first refinance. HUD will only give you credit for any UFMIP you paid on the loan you closed just before each time you refinance. What this means is that if you refinance the loan a second time (which would be your third reverse mortgage on the same property), when you look back to determine how much UFMIP credit you will receive based on what was paid on the prior loan, there is often no credit available because borrowers often pay very little or no UFMIP on their previous transaction on the refinance. If the loan limits, rates, and values were to make it feasible for a 4th transaction, whatever UFMIP paid by the borrower on the third transaction would be available for credit on that fourth transaction (looking back at the previous transaction where the borrower did pay UFMIP).So, for example, when you got your first reverse mortgage, let's say you paid 2% based on the property value or the HUD maximum claim amount. If you did the loan in 2016 at the maximum claim amount at the time of $636,150, the amount of UFMIP you would have had to pay would be $12,723. But let's assume you were in an area where your home experienced strong appreciation after 2016. Since it increased in value considerably after 2016, you decided to refinance in 2020 when the HECM max lending limit was $822,375 (and for argument's sake, let's say your home was then valued at $822,375 as well). The refinance rule was that you would pay 3% of the difference of the UFMIP based on the value or maximum claim amount, which would be $186,225. When you multiply that by 3% or .03, it equals $5,586.75. In our example, since you paid $12,723 on the last loan, the credit HUD allows for the first payment was higher than the new premium, so you would owe no UFMIP on this refinance.The UFMIP would be calculated the same way for any new refinances, but the credit for UFMIP already paid changes on subsequent refinances because it only considers the UFMIP you paid on the immediately preceding loan. Continuing our example, let's assume that your home is now worth $1,100,000 (over the current HUD maximum lending limit of $1,089,300, but the numbers are based on the HUD maximum or the property value, whichever is less). Your new maximum will be based on the HUD maximum lending limit, and the difference in value between your refinance in 2020 and today is $266,925 ($1,098,300 minus $822,375 = $266,925) when you multiply that by 3% or .03, that totals $8,007.75. This would be the amount due for UFMIP on this refinances. This is one of the reasons lenders need help quoting accurate UFMIP costs to borrowers when first speaking to them about reverse mortgage refinances. If the Loan Officer has all the information about prior loans and fees paid, they can know what HUD will charge once they receive it, including how many times the loan has been refinanced, what fees were paid, etc.

Hi Jessica, Thank you. We try to help as much as possible.

Hello Adrienne, I have never heard of such fees and in these amounts before for inspections. I would contact the lender directly and request an explanation of these fees before you do anything. If you are not happy with their explanations, then contact HUD if you do not feel you are getting a legitimate answer. They may be giving you fees that could be charged under certain circumstances and based on issues they uncover or there may be some other misunderstanding but if they are telling you that they are just going to start charging you these fees at this time, I would not agree that these are reasonable fees and would recommend that you contact an attorney, possibly the Consumer Financial Protection Bureau, AARP as they help seniors and the National Reverse Mortgage Lenders Association to ask for their assistance. I do not believe there are any places in your original documents that state a lender can charge you fees for inspections in these amounts. Lenders can charge reasonable fees for services performed and I think if they are telling you that if they need to do something to preserve the property those costs might run higher based on the work needing to be done, that might be just a misunderstanding. And typically, I would think that the new lender is only letting you know that there are different inspections that may be required based on certain circumstances but those would not even be needed in all cases. But an inspection is not something that costs the lender a lot of money so I would be very surprised if the inspections alone are what they are saying is what could cost this much and I really think you should contact them first to discuss. You can always decide if you need to take further action later if you do not get the answers to all your questions.

Hello Russell, Just as with any loan, your insurance would pay its claim payment to both you and the lender. The claim would hopefully be used to make the needed repairs to make the property habitable once again. In some instances, the property may never be habitable again. This is especially true with the land itself undergoes some catastrophe that renders it unbuildable such as a sink hole, landslides, earthquakes, etc. If it just takes longer to rebuild, your lender and HUD will work with you to get you back into your home. If the home can never be rebuilt due to the nature of the damages, the insurance proceeds would be first applied to pay off the loan balance and any remaining funds (along with the property) would be yours to use as you see best.

Hello Gloria, The rate moves based on the terms of the loan and based on the index set up at inception. If the loan is a one-year adjustable rate loan, the interest will change annually. A monthly adjustable rate will change monthly. But the index on which the loan interest rate is based was set up at the time the loan was closed. That could have been a few different things but in 2016 that rate was probably the LIBOR or London Inter Bank Offered Rate. I tried checking to see what the most widely used index for adjustable rate reverse mortgages in 2016 was because my memory serves that most loans we originated and all that I remember seeing offered were LIBOR but I am unable to find any printed information to verify. However, the rate for your father's loan is based on an index that is probably the LIBOR (or possibly a Constant Maturity Treasury or CMT) that is not at 0% as is the Fed Fund Rate. I am not aware of any loans that use the Fed Funds rate as their index. But something you should know, if your father has the LIBOR index it will soon be replaced with a new index as the LIBOR is expected to go away in 2021. If your father's loan is currently utilizing the LIBOR for its index, under the terms of the legal documents, if the index is no longer available the lender would be forced to choose a new index. If you would like further information about the fate of the LIBOR and what will happen after it is gone, the Consumer Financial Protection Bureau (CFPB) has a good article about it on their website at https://www.consumerfinance.gov/about-us/blog/libor-going-away-heres-what-you-need-know-about-libor-and-adjustable-rate-loans/ where you can read all about it.

Hi Tony,The Mortgagee's Loss Payee Clause is the clause that states that the mortgage loan holder is also a loss payee under the insurance policy. It is included in all loans, not just reverse mortgages. All Lenders require them any time a borrower obtains a loan in order to protect the lender's interest in the property as well as the borrower's.Without the Lender's Loss Payee clause, if a borrower suffered a loss (total or otherwise) from fire or other causes, a borrower could take the insurance payment and walk away without ever rebuilding the improvements and the lender could be left with a loan on a worthless piece of property. Therefore, they have the loss payee clause which requires the insurance company to make all checks out to the lender and the borrower and the lender will not sign off on the check until the property is repaired at times of damage.