With more than 153,000 people currently under evacuation orders in the Los Angeles area due to multiple wildfires, an estimated 10 deaths and thousands of buildings torched, the reverse mortgage industry is mobilizing at multiple levels with a clear, overarching message: affected borrowers must come in . Contact their loan servicer and insurance company as soon as possible.
Representatives of lenders and administrators, as well as individual promoters, have said this HousingWire‘s Reverse Mortgage Daily (RMD) states that it is imperative for borrowers to notify their servicer of anything that may affect the occupancy of their property due to the terms of Federal Housing Administration (FHA)-backed reverse mortgages.
While many businesses continue to assess the full impact of the disaster, the sheer number of reverse mortgage borrowers in Los Angeles County has prompted rapid responses.
Industry responses to the disaster
In the weekly email update for members, the National Association of Reverse Mortgage Lenders (NRMLA) advised its members to urge borrowers to contact their servicers immediately.
“Our thoughts are with our members, their staff, their families and their customers who may have been affected by the horrific fires in Southern California,” the association said. “Please be safe.”
Erika Macias, chief operating officer of the top 10 reverse mortgage lenders HighTechLendingbased in Southern California, said the company is assessing the situation in real time.
“We want to start by saying that our thoughts and prayers go out to the people of the affected communities in Los Angeles County,” Macias said. “We actively assess the risks to our borrowers, employees and partners we serve. We are prepared to take decisive action and implement our continuity plans where necessary.”
Macias added that HighTechLending is “committed to providing resources and flexibility to our customers and associates to help them through this difficult time.”
Leading lender in the reverse mortgage industry Finance of America (FOA) also expressed concern for residents and affiliated organizations affected by the wildfires and is working to quickly deploy its own resources.
“The situation in Los Angeles is heartbreaking. Finance of America has a significant Southern California community of employees, partners and borrowers, so this is close to home,” said Ashley Smith, the company’s senior vice president of brand communications. “Our team stands ready to provide the personalized care FOA is known for in our borrower engagement efforts, in our relationships with our partners, and to offer an employee assistance fund through our Cares charity.”
The company is “actively monitoring the evolving situation and will assess further steps once the extent of the impact is known,” Smith added.
New American financing (NAF) said it has established a contingency plan in Los Angeles County in an effort to minimize the impact of the event on employees, customers and other residents.
“In accordance with guidance from our lenders and other entities that own or insure mortgages, NAF will provide forbearance assistance to customers whose homes are uninhabitable or unable to operate due to the wildfires,” the company told RMD in a statement. “Assistance options may include monthly payment deferrals, repayment plans or loan modifications. The respite assistance usually lasts three to six months, but can be extended.”
The company is also strengthening its customer service staff to handle a higher volume of incoming calls. Employees are “available to provide information about deferment options, assist with insurance company and policy information, and guide customers through the process of receiving money from their insurance company,” NAF explains.
Situation on the ground
The sheer volume of Home Equity Conversion Mortgages (HECMs) in the affected area calls for a proactive approach to the industry’s response, says George Morales, National Sales Director at Mortgage cadence and an experienced reverse mortgage industry professional living in the area.
“I think we need to take a proactive approach to what’s happening regarding the catastrophic fires here in Southern California,” he said. “I looked at the numbers for the counties with the most reverse mortgages in the U.S., and it’s Los Angeles County, right where the fires are.”
According to data from the U.S. Department of Housing and Urban Development (HUD), there are more than 5,000 HECM origins in the Los Angeles-Long Beach-Glendale metropolitan statistical area and nearly 4,600 recommendations. California has long been the nation’s most dominant state in reverse mortgage activity.
One initiator of the area, Tom O’Donoghue van Reversal loans nowspoke with RMD to give his assessment of the situation. He lives about eight kilometers from where the fires are raging.
In addition to the concerns he has about past and present clients in the region, which he estimates at around 300, there are other elements that are understandably slowing down the progress of the current cases. This stems from Federal Agency for Emergency Management (FEMA) orders for the area.
“We were ready to release the loan documents by Friday, and we received an email from the investor stating that the FEMA notice went out on January 7 and the earliest they can close is 14 days after the declaration is made” , he says. said. “In this particular case, that will be January 21 before other requirements, bringing the timeline to approximately three weeks.”
The business he’s referring to isn’t directly affected by the fires — the property is about 10 miles from where buildings are burning — but the FEMA declaration applies to all of Los Angeles County, which will slow things down , O’Donoghue said. His client is frustrated because of a number of outstanding financial obligations that he had hoped could be repaid sooner with the proceeds of the loan.
When O’Donoghue reached out to former clients, he found that about 30% of them had been affected by evacuation orders and had to ask for help from friends and family in determining next steps. But he advises his fellow reverse mortgage lenders to contact any affected customers.
“Reach out to your customers,” he said. “Let them know you’re there if they need anything, if they need help, and just be a resource. It will probably be something completely unrelated to loans, but it will just be a tool for whatever they need.”
Next steps
Reverse mortgage service professionals have advised borrowers to contact their insurance companies and servicers immediately to facilitate assistance. This is especially true for anyone whose home has been damaged, but also applies to those affected by evacuation orders.
Gail Balettie and Jorie Kelly from Celink advise reverse mortgage borrowers to contact their insurance company immediately and begin the claims process. It is crucial to properly inventory the property damage and then contact the property manager with the appraisal information.
Affected borrowers who have not yet contacted FEMA for assistance should make that their next step can be done online or by phone at (800) 621-FEMA (3362).
Editor’s note: This is a rapidly developing situation. Look for more RMD coverage of reverse mortgage payments during the Southern California wildfires in the coming days.
