As the LA fires burn, the reverse mortgage industry is highlighting the need for a servicer, underwriter relationship

With more than 153,000 people now under evacuation orders in the Los Angeles area due to nearly 10 deaths and thousands of structures burned, the reverse mortgage industry is mobilizing on multiple levels with a clear, overarching message: Affected borrowers should get in touch. their loan servicer and insurance carrier as soon as possible.

This was reported by representatives of creditors and service providers, as well as individual entrepreneurs HousingWire's Reverse Mortgage Daily (RMD) says it's important for borrowers to inform their servicer (FHA) of anything that could affect the occupancy of their property under the terms of a backed reverse mortgage.

While many companies continue to assess the full impact of the disaster, the large number of reverse mortgage borrowers in Los Angeles County prompted a quick response.

Industry Response to Disaster

In its weekly email update to members (NRMLA), it advised its members to urge borrowers to contact their servicers immediately.

“Our thoughts are with our members, their employees, families and customers affected by the devastating wildfires in Southern California,” the association said. “Please be safe.”

Erika Macias, chief operating officer of a top 10 reverse mortgage lender HighTechLendingBased in Southern California, the company said it is assessing the situation in real time.

“We would like to start by saying that our thoughts and prayers are with the people of the affected communities in Los Angeles County,” Macias said. “We proactively assess risk for our borrowers, employees and partners we serve. We are ready to take decisive steps and implement our sustainability plans if necessary.”

Macias added that HighTechLending is “committed to providing resources and offering flexibility to our customers and employees to help them through this difficult time.”

A leading reverse mortgage industry lender (FOA) has also expressed concern for residents and affiliates affected by the wildfires and is working to quickly deploy its resources.

“The situation in Los Angeles is heartbreaking. Finance of America has a significant Southern California staff, partner and lending community, so it's close to home,” said Ashley Smith, the company's senior vice president of brand communications. “Our team is committed to offering the personal care FOA is known for in our borrower efforts, relationships with our partners, and offering an employee assistance fund through our charity, Cares.”

The company is “still actively monitoring the developing situation and will evaluate further steps once the extent of the impact is known,” Smith said.

(NAF) said it has initiated an emergency response plan in Los Angeles County to minimize the impact of the incident on employees, customers and other residents.

“In accordance with the guidelines of our lending partners and other entities that own or insure mortgages, NAF will offer resiliency assistance to customers whose homes are uninhabitable or inoperable due to wildfires,” the company said in a statement to RMD. “Help options may include deferring monthly payments, payment plans or loan modifications. Forbearance assistance usually lasts for three to six months, but can be extended.

The company is also beefing up its customer service staff to handle more incoming calls. NAF explained that staff are “available to provide information about forbearance options, assist with insurance carrier and policy information, and guide customers through the process of obtaining funds from insurance companies.”

The situation on the ground

The high volume of Home Equity Conversion Mortgages (HECMs) in the affected area requires a proactive approach to the industry's response, said George Morales, national sales director and longtime reverse mortgage industry professional based in the region.

“I think we need to be proactive about what's happening with the catastrophic fires in Southern California,” he said. “I looked at the number of counties in the U.S. that have the most reverse mortgages, and it's Los Angeles County where the fires are.”

According to (HUD), there are more than 5,000 HECM originations and approximately 4,600 approvals in the Los Angeles-Long Beach-Glendale metropolitan statistical area. California has long been the most dominant state in the country for the reverse mortgage business.

One of the region's founders, Tom O'Donoghue, spoke to RMD to assess the situation. He lives about five miles from where the fires burned.

In addition to his concerns about past and present customers in what he estimates to be about 300 territories, there are other elements that understandably delay the continuation of current business. This comes from (FEMA) orders for the area.

“We were ready to receive the loan documents on Friday and received an email from the investor saying that the FEMA notice went out on January 7th and that it could close 14 days after the declaration,” he said. he said. “In this particular case, that would be January 21 before other requests, bringing the timeline to about three weeks.”

O'Donoghue said the case he's referring to isn't directly affected by the fires — the property is about 10 miles from where the structures burned — but the FEMA declaration applies to all of Los Angeles County, which is slowing things down. His client is frustrated by some outstanding financial obligations that they hoped would be resolved more quickly by using credit facilities.

Contacting former clients, O'Donoghue found that about 30% were affected by evacuation orders and had to ask friends and family for help in determining next steps. But he advises fellow reverse mortgage originators to reach out to affected customers.

“Connect with your customers,” he said. “Let them know that if they need anything, if they need any help, you're there and just be a resource. It will probably be something completely unrelated to the loan, but be a resource for whatever they need.

Next steps

Reverse mortgage service experts advised borrowers to immediately contact insurance companies and service providers to facilitate assistance. This is especially true for anyone whose home has been damaged, but also for those affected by evacuation orders.

Gail Balettie and Jorie Kelly advise reverse mortgage borrowers to contact their insurance carriers immediately and begin the claim process. The key is to correctly estimate the property damage and then contact the servicer with the assessment information.

Affected borrowers who have not contacted FEMA for assistance should take the next step.

Editor's note: This is a rapidly developing condition. Look for more RMD coverage of reverse mortgage servicing during the Southern California wildfires in the coming days.

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