After the loan closes, a loan “servicer“
manages the account and is responsible
for disbursing monthly payments to the
homeowner (if this payment option is chosen),
advancing funds from the line of credit upon request,
collecting any voluntary repayments and sending periodic statements.
The servicer is also responsible for monitoring to make sure that real estate taxes are paid, insurance is maintained on the home and the borrower continues to live in the property.
A Servicer who is a NRMLA member will
always be available to make sure you are
aware of the current loan balance and
all costs, as well as answer any questions you might have about your reverse mortgage.
A reverse mortgage borrower
is responsible for staying current
on his/her real estate taxes and
homeowner's insurance. As a borrower, you can pay the taxes yourself or set up a set-aside and have the Servicer pay them for you. If you go into arrears on your taxes and insurance, you take the chance of going into default. When your loan is in default, your Servicer will request that HUD deem the loan due and payable. Additional counseling is available to those who find themselves in default. Your Servicer will help you find a counselor. A counselor will work with you to try to set up an acceptable repayment plan.
The Servicer has internal systems in place
to inform and alert you if there are any tax
and/or insurance issues with your loan
and will notify you promptly if you fall behind
on either responsibility.
Servicers have also implemented safety nets that are intended to prevent borrower fraud, identity theft or outside parties taking undue advantage of borrowers.