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 structures burned, the reverse mortgage industry at multiple levels is mobilizing at multiple levels with a clear, overarching message: Impacted borrowers must get in touch with their loan servicer and insurance carrier as soon as possible.
Representatives from lenders and servicers, as well as individual originators and brokers, have told HousingWire’s Reverse Mortgage Daily (RMD) that it’s imperative for borrowers to let their servicer know about anything that could impact the occupancy of their property due to the terms of Federal Housing Administration (FHA)-backed reverse mortgages.
While many companies are continuing to assess the full impact of the disaster, the sheer volume of reverse mortgage borrowers in Los Angeles County has motivated quick responses.
Industry responses to the disaster
In its weekly email update to members, the National Reverse Mortgage Lenders Association (NRMLA) advised its members to urge borrowers to immediately contact their servicers.
“Our thoughts are with our members, their staffs, their families and their customers who may have been impacted by the horrific fires in Southern California,” the association said. “Please be safe.”
Erika Macias, chief operating officer of top 10 reverse mortgage lender HighTechLending, which is based in Southern California, said that the company is assessing the situation in real time.
“We’d 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 are actively assessing risk to our borrowers, employees and partners we serve. We are prepared to take decisive action and exercise our continuity plans wherever necessary.”
Macias added that HighTechLending is “committed to providing resources and offering flexibility to our customers and employees in order to assist them through this difficult time.”
Leading reverse mortgage industry lender Finance of America (FOA) also expressed concern for residents and affiliates impacted by the wildfires.
“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 offer the personal care FOA is known for in our borrower engagement efforts, in our relationship with our partners, and to offer an employee assistance fund through our charity, Cares.”
The company is “actively monitoring the still developing situation, and will assess further steps once the extent of the impact is known,” Smith added.
New American Funding (NAF) said it has initiated an emergency response plan in Los Angeles County in an effort to minimize the event’s impact on employees, customers and other residents.
“In line with guidelines from our lending partners and other entities that own or insure mortgages, NAF will offer forbearance assistance to customers whose homes are uninhabitable or who cannot work due to the wildfires,” the company told RMD in a statement. “Assistance options may include postponement of monthly payments, repayment plans, or loan modifications. Forbearance assistance typically lasts three to six months, but can be extended.”
The company is also bolstering its customer care staff to handle a higher volume of inbound calls. Staff are “available to provide information on forbearance options, assist with insurance carrier and policy information, and guide customers through the process of receiving funds from their insurance company,” NAF explained.
Situation on the ground
The sheer volume of Home Equity Conversion Mortgages (HECMs) in the impacted area calls for a proactive approach to the industry’s response, said George Morales, national sales director at Mortgage Cadence and a longtime reverse mortgage industry professional who lives in the region.
“I think we need to have a proactive approach to what’s happening regarding the catastrophic fires here in Southern California,” he said. “I’ve looked at the numbers of 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 originations in Los Angeles County and nearly 4,600 endorsements. California has long served as the most dominant state in the country for reverse mortgage business.
One area originator, Tom O’Donoghue of Reverse Loans Now, spoke to RMD to offer his assessment of the situation. He lives roughly five miles from where the fires have been burning.
In addition to the concerns he has for past and current clients in the area, which he estimates at about 300, there are other elements that are understandably delaying current business from proceeding. This stems from Federal Emergency Management Agency (FEMA) orders for the area.
“We were ready to get loan documents out for Friday, and we got an email from the investor stating that the FEMA notice went out on Jan. 7, and that the earliest they can close is 14 days after the declaration is made,” he said. “In this particular case, that will be Jan. 21 before other requirements, pushing the timeline to about three weeks.”
The case he’s referring to is not directly impacted by the fires — the property is roughly 10 miles from where structures 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 some outstanding financial obligations they had hoped could be addressed sooner using the loan proceeds.
When reaching out to former clients, O’Donoghue found that about 30% of them have been impacted by evacuation orders and have had to ask for assistance from friends and family as they determine next steps. But he advises his fellow reverse mortgage originators to check in with any impacted clients.
“Reach out to your clients,” he said. “Let them know that you’re there if they need anything, if they need any help, and just be a resource. It’ll probably be something completely non-loan-related, but just be a resource for anything they need.”
Next steps
Reverse mortgage servicing professionals have advised borrowers to immediately reach out to their insurance companies and servicers to facilitate immediate relief. This is especially true for anyone who has had their home damaged but also applies to those who have been impacted by evacuation orders.
Gail Balettie and Jorie Kelly of Celink advise reverse mortgage borrowers to immediately contact their insurance carrier and begin the claims process. It is key to properly take stock of property damage and to then contact the servicer with the assessment information.
Impacted borrowers who have not already contacted FEMA for assistance should make that their next step, which can be done online or over the phone at (800) 621-FEMA (3362).
Editor’s note: This is a rapidly developing situation. Look for more RMD coverage of reverse mortgage servicing during the Southern California wildfires in the coming days.
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