Two catastrophic hurricanes hit in both Texas and Florida within two weeks. As this is being typed, Hurricane Maria is wreaking havoc on Puerto Rico. “Harvey” and “Irma,” once relatively obscure names, will no doubt live in infamy for years to come. According to Mortgage News Daily, “Irma-related disaster areas now include more than 90 percent of all mortgaged properties in Florida.” A large number of reverse mortgage borrowers have been impacted and the quality and compassion of the servicing function was put to the test.
From the moment a natural disaster notification alert is first sounded to the day the first insurance proceeds check reaches our office, a sub-servicer must work to protect client interest in the property as well as compassionately assist their borrowers.
There is a calm that occurs in those precious (few) moments just before notice is received that catastrophe has struck. This is the proverbial window of opportunity within which to skillfully execute a series of calculated and precise actions that have been honed through years of tried and tested servicing experience.
An announcement is made to all employees explaining how best to offer compassionate assistance to borrowers—and how to support co-workers who will be on the frontlines of borrower care. Given the volume of claims, along with the emotionally charged nature of each inquiry, the support sub-servicers are able to provide has to be concrete and practical in nature. Just sharing the knowledge of where a borrower may turn for remedy is comforting when offered with compassion.
First we must identify the loan listing, which is easier said than done! The list grows every day as more counties are declared disaster areas. Just when the listing has been finalized, more counties are added.
We communicate with clients about their particular loan listings. Will a letter be mailed? What properties qualify for HUD’s moratorium? Will inspections be performed? Has the borrower already contacted our office to discuss damage at the property? Is there a separate investor needing certain updates?
The insurance claim process after a natural disaster can be longer than normal depending on the magnitude of the disaster. Insurance companies, often overwhelmed with claims, work hard to provide assistance to homeowners based on their coverage. In the best of circumstances, it takes time for adjusters to visit properties and finalize reports, and for insurance companies to release funds. Given the sheer volume of homeowners warranting assistance in natural disasters, patience is called for in every transaction.
Throughout Hurricanes Harvey and Irma, several insurance companies released an initial payment upfront to allow a homeowner to commence cleanup and necessary repairs, pay for temporary housing, secure a contractor, and simply protect the home from any additional damage. Sub-servicers have their own processes and procedures for handling these initial disbursements, and it is important for sub-servicers to display a greater-than-average sense of urgency with regard to releasing funds in these cases. Borrowers should be directed to contact their servicer promptly in order to begin these processes. A servicer walks a tightrope between protecting the investor’s interest in the property and ensuring the borrower is promptly receiving the assistance they need. Proper balance is key.
Homeowners maintain insurance on their property and yet their damage is not always covered by an insurance claim. If a homeowner was unable to maintain insurance, it is likely their servicer force-placed insurance on their behalf. However, depending on the property’s location, it is not always possible for a servicer to place the insurance required to cover specific losses on the property. A lender-placed policy typically does not cover items like temporary housing or the replacement of personals.
Whenever a homeowner finds himself in this situation, it is the servicer’s responsibility to relay what other options the homeowner may have. Many servicers instruct the homeowner to contact the Federal Emergency Management Agency (FEMA) right away to file a claim. It is possible FEMA will be able to provide financial assistance to borrowers in need. A sub-servicer may also direct the borrower to their local municipality to inquire about any grants that may be offered immediately or in the future.
Clients are not indifferent to the challenges their borrowers face, and many ask how they can assist their servicer during these initial critical moments. Communication is key! The sub-servicer and client should be in contact with one another to discuss the client’s preferences moving forward. The sub-servicer takes many steps to keep clients up-to-date on the portfolio, all while assisting borrowers in need. A servicer understands there will be times when immediate answers are needed. If a client and sub-servicer set up regular meetings or touch points to stay abreast of the situation, both parties will have the time to relay important information and ask pertinent questions.
If building strong relationships is made a priority year-round, then the strength and level of trust forged between clients, borrowers and their servicers are steel fibers that will hold everything together for our people and product when natural disasters strike and the hard work of recovery begins.
Sydney Godbehere is the vice president of loan operations for Celink. She has worked at Celink for 10 years and is passionate about providing the highest-caliber service to clients and borrowers. She credits her team and Celink’s mission, vision and values with inspiring her work every day.