How One Former Loan Officer Handles Reverse Mortgage Eligibility Obstacles

It is well-known that certain upgrades may be required by the Federal Housing Administration for someone to be eligible for a reverse mortgage, but there is a side of these types of situations that is often overlooked.

In many cases, the driving force behind applying for a reverse mortgage in the first place is to gain extra funds, so the chance of a reverse mortgage applicant having extra money sitting around for renovations they didn’t think they needed is slim to none.

A business in Westlake, Ohio has made handling these types of situations their speciality. David Michael, owner of Fidelity Homestead Associates used to be a reverse mortgage loan officer himself, but kept running into situations with his own clients in which they needed several renovations done to their home in order to be approved for a reverse mortgage, but couldn’t afford it.

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Michael then started his own business to help these types of clients. He has built up a network of contractors all over the country in the last four years since starting the business and makes sure that all of his clients get the necessary renovations done, regardless if the client can pay for it at the beginning. They take the chance on the client receiving the loan that once the renovations are finished they will be accepted and be able to pay back Fidelity Homestead Associates with some of the loan proceeds.

“Sometimes the jobs are small and only cost about five or six grand, but other times we have to do a whole gut rehab,” says Michael.

One area in particular that makes certain situations extremely unique is when a homeowner has trouble with hoarding, Michael explains.

It is not uncommon for adults age 65 and older with previous hoarding issues to increase these tendencies as they age, according to a qualitative study by Monika Eckfield, PhD, associate specialist in the University of California, San Francisco Department of Psychiatry.

When Fidelity Homestead Associates encounters a person in need of renovations to become eligible for a reverse mortgage, and this person happens to be a hoarder, there are certain steps they take to make sure the situation goes smoothly, explains Michael.

“First of all, the contractor has to have the right demeanor and needs to be able to actually talk to the homeowner and be able to show compassion,” he says.

One homeowner who required this attention was living by himself in California in a very nice area, surrounded by homes that were worth millions of dollars, Michael shares.

“We had to do a whole gut rehab, he says. “The homeowner was wheelchair bound and a hoarder. The home had no running water and was infested with rats. There were holes the size of a small child in the floors that the rats had made, but he was very attached to his belongings and didn’t want to leave.”

In most cases of hoarding, it usually takes a number of phone calls and comes down to giving the homeowner options on how they prefer to handle going through all of their belongings. Many times, Fidelity rents a storage unit to put the remaining items after all of the trash has been removed.

“When we clear these types of homes out, we usually end up taking out about six 40-yard dumpsters full of trash from the homes,” he says.

In addition to having a customer agree to allow someone in their home, in most cases, a gut rehab is necessary, so they have to move out of the house completely for a few weeks. “Most of the time we put the homeowner in a hotel and pay for it,” Michael explains.

These types of projects are common for Michael and his network of contractors at Fidelity Homestead Associates, and though they do end up taking a large amount of time, it all becomes worth it in the end to be able to see homeowners stay in the home they never wanted to leave in the first place, he shares.

“A couple weeks after the the rehab was finished, it was Christmas and one of the contractors and his wife went over to visit the homeowner and sent me a picture. He was all cleaned up and had just the biggest smile on his face,” Michael says. “That’s why I do what I do, to make people happy.”

The majority of Michael’s business at Fidelity Homestead Associates is working with homeowners who are in need of renovations that the FHA has required of them in order to get a reverse mortgage.

“We do provide a valuable service to the reverse mortgage industry,” says Michael. “If we didn’t exist all of those homes would fall through and people could potentially lose their homes altogether.”

Written by Alana Stramowski