As LA fires burn, reverse mortgage industry stresses need for workers, insurance contacts

With more than 153,000 people currently under evacuation orders in the Los Angeles area due to multiple wildfires, nearly 10 deaths and thousands of burned buildings, the mortgage industry on many levels is getting a clear, overwhelming message: Affected borrowers must get in. contact their loan officer and insurance carrier as soon as possible.

Representatives from lenders and employees, as well as individual founders, told HousingWireThe Reverse Mortgage Daily (RMD) is important for borrowers to notify their servicer of anything that could affect their tenancy due to the terms. Federal Housing Administration (FHA)-backed reverse mortgage.

While many companies are still assessing the full impact of the crisis, the large number of mortgage lenders going back to Los Angeles County has encouraged quick responses.

Industry responses to the crisis

In its weekly email update to members, i National Reverse Mortgage Lenders Association (NRMLA) has advised its members to urge borrowers to contact their workers immediately.

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

Erika Macias, CEO of top 10 reverse mortgage loan HighTechLendingbased in Southern California, said the company is monitoring 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,” said Macias. “We assess the risk to our borrowers, employees and partners we serve. We are prepared to take decisive action and implement our plans to continue where necessary.”

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

The industry’s leading mortgage lender American Finance (FOA) has also expressed concern for residents and their partners affected by the wildfires and is working to mobilize its resources as quickly as possible.

“The situation in Los Angeles is sad. 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 communications. “Our team stands ready to provide FOA with personal care in our borrower engagement efforts, in our relationships with our partners, and in providing an employee assistance fund through our charity, Cares.”

The company is “actively monitoring the developing situation, and will evaluate other measures once the extent of the impact becomes 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 impact of the event on employees, customers and other residents.

“In accordance with the guidelines from our lending partners and other organizations that manage or guarantee mortgage loans, NAF will provide forbearance assistance to customers whose homes are unoccupied or inoperable due to the wildfires,” the company told RMD in a statement. “Help options may include deferring monthly payments, payment plans, or loan modifications. Forbearance assistance usually lasts three to six months, but can be extended.”

The company is also strengthening its customer care staff to handle the high volume of incoming calls. Staff are “available to provide information on forbearance options, assist with insurance company and policy information, and guide customers through the process of receiving payments from their insurance company,” NAF explained.

The situation is down

The high volume of Home Equity Conversion Mortgages (HECMs) in the affected area calls for a quick response in the industry, said George Morales, national director of sales at . Mortgage Cadence and a retired real estate industry professional who lives in the region.

“I think we need to be more proactive about what’s going on with the catastrophic fires here in Southern California,” she said. “I looked at the numbers of counties with mortgages in the US, and it’s Los Angeles County, where the fires are burning.”

According to data from US Department of Housing and Urban Development (HUD), there are more than 5,000 HECM originations in the Los Angeles-Long Beach-Glendale metropolitan area and approximately 4,600 concessions. California has long served as the most dominant state in the country for the reverse mortgage business.

The founder of one place, Tom O’Donoghue was Reverse Loan Nowspoke to RMD to provide his analysis of the situation. He lives about five kilometers from where the fire was burning.

In addition to the concerns he has about past and present customers in the area, which he estimates to be around 300, there are other factors that are understandably holding the current business back. This is from Federal Emergency Management Agency (FEMA) local orders.

“We were ready to issue the loan documents on Friday, and we received an email from the investor saying that the FEMA notice went out on Jan. 7, and that the earliest they can close is 14 days after the announcement,” it said. “In this case, that would be Jan. 21 before the other requirements, which would make the timeline about three weeks.”

The case he’s talking about wasn’t directly affected by the fires — the area is about 10 miles from where the buildings burned — but the FEMA declaration applies to all of Los Angeles County, which will slow things down, O’Donoghue said. His client was frustrated by some outstanding financial obligations that he had hoped could be dealt with quickly using the loan.

When reaching out to former clients, O’Donoghue found that about 30% of them were affected by the evacuation orders and had to ask friends and family for help as they decided their next steps. But he advised his mortgage origination colleagues to check on any affected clients.

“Reach out to your customers,” he said. “Tell them you are there if they need anything, if they need anything, and just be a resource. It will probably be something completely unrelated to the loan, but a resource for whatever they need. “

Next steps

Reverse mortgage service experts advise borrowers to immediately reach out to their insurance companies and agents for help. This is especially true for anyone who has had their home damaged but also applies to those affected by evacuation orders.

Gail Balettie and Jorie Kelly be Celink advise mortgage borrowers to contact their insurance company immediately and begin the application process. It is key to properly check for property damage and contact the operator with inspection information.

Affected borrowers who have not contacted FEMA for assistance should take that next step, which can be done online or by phone at (800) 621-FEMA (3362).

Editor’s note: This is a rapidly growing trend. Look for more RMD coverage of mortgage service deferrals during the Southern California wildfires in the coming days.

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