What’s the most effective legal way to avoid any expected problems with a new reverse mortgage lender? -Alfred
This is a very open question. There are several ways to handle issues with lenders, but it depends on the issue you are having. And when you say, “expected problems with a new reverse mortgage lender”, that indicates to me that you aren’t even having the issue yet and that this is a new loan you recently closed so it makes it even more difficult to tell you how to legally handle an unexplained issue that has not yet occurred.
So, for a general rule, I would say that communication is always key. Remember that the lender can only do what HUD allows on the program and must do what HUD mandates for the program. What I mean by this is that if HUD requires something or forbids something, the lender will not have the latitude to change their policy or change whatever it is that you feel is a problem and if your issue boils down to a lender policy, you might have success with a well-stated request.
Good examples of things over which the lender has no control would be to allow you access to more funds than the program allows or at a more rapid pace than is allowed. Whereas if your anticipated issue is that the lender keeps calling you at a time of the day that interrupts a medical procedure, there should be no reason you can’t get them to change their calling habits.
HUD has some rules that are absolute and some that are guidelines (Link to HUD Servicing Manual), you need to find out the source of your issues and if it is with the lender, then try to determine if you can reach someone higher up in management who might be able to resolve your request. If your expected problem is a HUD rule for the program, if the lender is administering the program correctly in accordance with HUD rules, my experience is that HUD will not change their program requirements to try to accommodate borrower requests.
If you feel that the lender is not living up to the terms of the reverse mortgage contracts (Note, Deed of Trust and Security Agreement), then you can always seek relief in a court of law as you can with any other contract. This can be expensive though and I would caution that you make certain that the problems are truly a breach and not just a difference of opinion. For that you may need to seek the guidance of a legal professional.
You also have the right to pay the loan off at any time without penalty, but then again, if you just closed the loan, that would mean that anything you paid to open the loan would be gone and so that could also be an expensive proposition and not one I would suggest lightly.
In the end, I get back to my first general rule – communication. Contact your lender or servicer and discuss the issues with them to see if there is an easy solution or compromise. I know that as a rule, lenders are not looking to make things difficult and would love to do anything they can within their authority to resolve borrower issues. If the first person you speak with can’t help you, elevate the issue to the next level. I can’t speak for all lenders, but I do not believe anyone wants to have an unhappy customer and the only question would be whether they can accommodate your request. I truly believe that if they can help (in other words it is not something that they are not capable of doing or prohibited by HUD), they will do all they can to do so.