After the Storm: Home Damage and Your Reverse Mortgage
With Hurricane Matthew looming over the southeastern United States, the National Reverse Mortgage Lender’s Association (NRMLA) offers advice for homeowners with reverse mortgages. If you have a reverse mortgage, what should you do if storm damage strikes your home?
NRMLA asked two reverse mortgage experts, Ryan LaRose, president and chief operating officer of Celink, and Leslie Flynne, chief operating officer of Reverse Mortgage Servicing at Reverse Mortgage Solutions, to explain what homeowners should do to report the damage and start the repair process:
- If your home was damaged, call your homeowner’s insurance company immediately and file a claim, say LaRose and Flynne;
- After calling your insurance company, LaRose and Flynne say you should contact your loan servicer and inform them about the damage to your home;
- What happens next depends on how severely your home was damaged as well as the amount of funds the insurance company issues. Based on these factors, your loan servicer may have to “hold the insurance funds, monitor the progress of the repairs and disburse the funds to the contractor (similar to a repair set aside) after an inspection has been completed on the home,” said LaRose and Flynne.
- If your home was damaged and you have to move out, be sure to give your new contact information to your loan servicer. LaRose and Flynne also recommend providing an alternate contact person in case the servicer is unable to reach you.
- If your home did not sustain damage, but you can’t return for an extended period of time, LaRose and Flynne recommend informing your loan servicer.
Homeowners with home equity conversion mortgage (HECM) lines of credit may find they can tap these funds to start rebuilding and repairing their homes, says Donald Jay Korn a financial writer with Bank Investment Consultant. Korn says homeowners may be able to repay the line of credit with the proceeds of their insurance claims.
Maintaining homeowner’s insurance and continuing to pay property taxes are required with a reverse mortgage, but some homeowners may struggle to keep up in the wake of storm damage. Some states offer relief to troubled homeowners. For example, the Elderly Mortgage Assistance Program (ELMORE) in Florida and Keep Your Home California can help reverse mortgage homeowners in these states maintain their insurance and property tax payments. The website Need Help Paying Bills provides lists by state of government programs. The Federal Housing Administration also has resources and information to help homeowners stay afloat: Loss Mitigation Services for FHA Homeowners and their Frequently Asked Questions may be helpful.
NRMLA: Weekly Report
Bank Investment Consultant: New Rules for Reverse Mortgages
Elderly Mortgage Assistance Program (ELMORE): floridaelmore.org
Federal Housing Administration: Loss Mitigation Services for FHA Homeowners
Federal Housing Administration: Frequently Asked Questions
Keep Your Home California: keepyourhomeflorida.org
Need Help Paying Bills: State Government Programs That Provide Mortgage Assistance and Stop Foreclosures