For communities engulfed in the wildfires that took place earlier this year in the Los Angeles area, lives have been upended and additional strain has been placed on an already-stressed housing system in Southern California.
But for wildfire victims who are also reverse mortgage borrowers, they may encounter problems stemming from a major disaster interacting with what’s already recognized as a complicated financial product.
That’s why the Los Angeles County Aging and Disabilities Department hosted a special event on May 10 designed to help older residents whose homes were damaged by the Eaton Fire, and who may be facing property damage or loss while maintaining a Home Equity Conversion Mortgage (HECM).
The event featured Aimee Williams, the associate vice president of justice for tenants, homeowners and unhoused individuals at Bet Tzedek Legal Services, a free legal services agency in the area.
Williams is an attorney licensed to practice law in California, and she has served for more than 10 years as a housing lawyer in LA, working in both nonprofit legal services and privately on behalf of tenants and consumers.
Williams sat down with HousingWire’s Reverse Mortgage Daily (RMD) before and after the event to gauge her planning for it and what she hoped the results would be.
Impact of the fires
Williams said that the wildfires have had a major impact on the constituencies served by the aging and disabilities department, which often include seniors and low-income individuals.
This also makes reverse mortgage borrowers a common constituency for the organization, and the county has strong partnerships with Bet Tzedek due to its large portfolio of elder justice initiatives.
“We have existing partnerships with different county agencies, and when they were putting on this event, they invited us to attend to provide a ‘know-your-rights’ presentation,” she explained.
Because of the organization’s focus on direct services, Bet Tzedek is always looking for ways to reach more people when its services are needed. That made participating in the reverse mortgage event a natural fit, Williams said.
“Being able to provide community education in this way, we really hope to be able to reach more people and prevent the worst from happening,” she said. “Many homeowners won’t need a lawyer for what they are facing — and the less lawyers you can deal with in your life, the better, generally. So we like to be able to give people enough information to help navigate what is a really complex process.”
Navigating disaster recovery
Williams said that common issues seen during the wildfire recovery are tied to navigating the complex web of rules, regulations and other requirements that stem from reverse mortgage servicing and how they combine with local, state and federal disaster response mechanisms.
These often include large financial decisions and a need to balance multiple variables.
“You’re interacting with multiple agencies related to your property taxes,” she said. “Insurance is a huge one, then [the Federal Emergency Management Agency (FEMA)] and [Federal Housing Administration (FHA)] are in town, trying to help out. And then, obviously, your mortgage servicer as well.”
While the majority of reverse mortgages that the organization deals with are FHA-backed, Williams said it also sees “a number” of borrowers engaging with proprietary reverse mortgage programs, given the generally elevated home values across the county.
“We don’t see those as often as the government-backed loan, but we don’t want to discount those because they often offer a unique challenge,” she said.
Williams said that roughly 10% of the reverse mortgage borrowers the organization serves “find themselves in foreclosure,” typically due to a servicing issue of some kind. Adding the complication of the wildfires on top of these existing issues can be a recipe for a convoluted legal mess.
Hopes envisioned, initial response
Williams said that her hopes going into the event were driven primarily by a desire to inform people about “what exactly [a borrower’s] obligations are,” she said. “And particularly when it’s on the borrower to rebuild, if they want to do that, and navigating what that process is.”
In an interview conducted after the event, Williams described the event as a good one.
“There were probably about 30 people there, [in addition to] HUD-certified housing counselors and a couple of different county and state agencies,” she said. “A lot of the information we were able to provide prompted feedback from service providers that it was helpful for them as well, and I was able to highlight some of the work they’re doing to connect people.”
Getting the word out is the name of the game, she added.
“That’s relevant because so much of this disaster recovery is being able to know what these resources are and connect with them, whether it’s for a reverse mortgage or other kinds of borrowers or homeowners.”
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