When borrowers obtain a reverse mortgage to access home equity, lenders take a substantial interest in their homes. Many times, unbeknownst to homeowners, zoning requirements and standards of safety and operation change in the years a home is occupied. Small repairs that may have been put off for years now become requirements for closing. For the majority of borrowers, bringing their homes into HUD compliance with these repairs comes as a relief, but for some, this closing requirement feels intrusive and unwarranted.
Repair administration is a critical aspect of the reverse mortgage process. When a borrower applies for a reverse mortgage, an appraisal provides the lender and borrower with a full assessment of the property’s liabilities and assets. The structure must be brought up to code and put in good and proper repair prior to closing. Repair administration professionals oversee the process of the borrower bringing a home up to code and in full and safe working order. Servicing professionals in the repair administration department walk a tightrope between vigorously protecting their lender and HUD’s interests in the property while respecting and protecting the borrowers. In the best of circumstances, the process moves smoothly and without incident, and repair administration professionals will appear to glide across this wire.
After closing, the only time a borrower will encounter the repair administration department is if an insurance claim is made on the property for damages (commonly referred to as “loss drafts”). Servicing departments protect their clients’ interests and serve as the liaison between the lender, the borrower and the insurance company.
What happens when natural disaster strikes and countless HECM properties are impacted at once? The Celink repair administration department learned the hard way when Hurricane Sandy reared her ugly head this past year.
Natural disasters throw the best people, places, systems and processes into chaos. Celink borrowers were impacted in great numbers by Sandy. Phone calls were nonstop and borrowers were in a state of shock; they could not fully grasp what had just happened. They didn’t want to hear about procedures; they wanted their homes restored and their sense of safety returned. Repair administration was charged with the goal of helping get borrowers back into their homes, all while protecting their client’s interest in the property.
Regular meetings were held to remind staff that while the workload was obviously overwhelming at times, and phone calls seemed to lead to upset borrowers rather than resolution, it was clear that making everyone happy might not happen right away. It was critical that the team be reminded that what it was going through could not possibly compare to what borrowers were going through.
In the aftermath of Sandy and any natural disaster, repair administration provides critical assistance to borrowers in a time when they are most vulnerable. Everything they know about “normal life” feels lost in the storm, and servicers are charged with helping piece their lives back together. Repair situations are never black and white; there are huge gray areas, and sometimes procedures need to adjust slightly in order to create the best outcome for all.
Repair administration professionals work with clients and borrowers to innovate procedures that work for all and make rocky roads smooth, while always remembering that the primary goal is to get
Ryan LaRose is the president and COO of Celink, a reverse mortgage subservicer. Sydney Godbehere manages repair administration, loss draft and line-of-credit processing for Celink.