Safeguard Your Reverse Mortgage Documents
Posted by Robert H Irving on February 4th, 2010
A recent experience of one of my clients is demonstration of why you should always (1.) safeguard your original reverse mortgage loan documents and (2.) maintain contact with your loan officer long after your loan closes.
Mr. & Mrs. Johnson (names changed to guard client privacy, of course) did their HECM loan with me back in 2003 when I originated for BNY Mortgage – Reverse Mortgage Division. Since that time the corporate name on my office door has changed several times due to merger & acquisition or better opportunity. But I have always notified my clients and provided details on how to contact me should they need my assistance.
Reverse Mortgage Account Number Changed
Mr. & Mrs. Johnson’s loan was initially serviced by Seattle Mortgage and all went well for many years. But sometime in 2008 the Seattle Mortgage Reverse Division was purchased by Bank of America. Bank of America dutifully notified Mr. Johnson that they were assigning a new account number to his reverse mortgage account. The new statements soon began arriving addressed to Mr. Johnson at his home in Massachusetts. Balances appeared to be correct and the Johnsons continued to draw a small amount of cash several times during the year to stay current with their financial obligations. Then, unexpectedly, Mr. Johnson passed away in January of this year.
Within a few weeks, Bank of America forwarded a form letter to Mrs. Johnson advising that according to the terms of the agreement the reverse mortgage was now due and payable. She was given a period of time to settle the outstanding balance due but the line of credit on the account was immediately terminated. Mrs. Johnson was shutoff from any further draw on her account at a time when she most needed the emergency money.
Her phone calls to Bank of America were unproductive. She was repeatedly transferred from department to department and given inaccurate information. At one point, a representative even suggested she refinance her reverse mortgage to avoid the possibility of foreclosure. A very inappropriate recommendation. She did not know how to resolve this very serious problem.
Help From Your Reverse Mortgage Loan Officer
Finally, Mrs. Johnson recalled communications from me informing her of my new position and encouraging contact for any reason. She turned to me for advice and assistance. I could sense that she was distraught and emotionally drained. I immediately met with her at her home accompanied by her daughter and her son. After some investigation we found an original copy of the Loan Agreement signed at closing by both Mr. & Mrs. Johnson. We determined that an official copy of the reverse mortgage document with both signatures was on file at the county registry of deeds. An original deed to the property with both names was also located. It then became obvious that when Bank of America assigned the new account number to Mr. & Mrs. Johnson’s loan, they arbitrarily dropped Mrs. Johnson’s name from their records. All future monthly statements and communications from Bank of America contained only Mr. Johnson’s name. Even checks drawn on the account were made out to Mr. Johnson only.
Correcting Reverse Mortgage Bank Error
Mrs. Johnson has retained an attorney to represent her to communicate with the bureaucracy at Bank of America to suggest they get their records corrected immediately. However, an error like this should never happen. And when it happens to an elderly person who has just lost a spouse, the confusion and desperation can be completely overwhelming. Bank of America or any other lender should make a better effort to help customers deal with these situations. I’m sure this is not the first time something like this has happened.
Moral of the story: Save your paperwork and choose a loan officer who will be there to help you many years later if a problem arises. Keep at least your Loan Agreement and your Mortgage in a safe place known to both spouses. Always check your monthly statement for balances and note carefully any name, address or account number changes. Contact the service provider immediately if you note anything out of the ordinary. Take names when you talk to people.
Subscribe to Reverse Mortgage Information by Email
Author – Robert H. Irving, CSA®
Senior Reverse Mortgage Consultant






Chase Manhattan Bank announced that they intend to offer reverse mortgages to customers throughout their branch network. They hope to join Bank of America, Wells Fargo, Financial Freedom (the post IndyMac Bank bankruptcy version), MetLife Home Loans and various other
This evening I face the unpleasant task of notifying all my prospective clients that their procrastination is about to cost them as much as $30,000 (or more) in reverse mortgage benefits.
Before you do business with a reverse mortgage lender it would be prudent to confirm that the loan officer who will be working closely with you is actually licensed to do business in your state. This might sound shocking but many loan officers have never been required to pass a formal licensing test in your state. Even more have never been vetted with either a criminal records check or a credit check. How do you know who you are dealing with? How confident can you be that your personal information is protected?

Recent Comments