Reverse mortgage repayment in the case of total loss due to wildland fire.

[sillfam]

My 98 year old mother lived in her home in Paradise, Ca. up until we experienced a devastating wildfire on Nov. 8th 2018. She has been receiving monthly payments from a reverse mortgage for quite a number of years(unknown how many). Now that her home is burned to the ground I'm having a hard time trying to figure out how much the insurance is obligated to pay to the loan servicing company. The house has been continually insured, and property taxes have always been paid. I know she will continue to recieve payments for up to one year after being displaced from the home. So, with that being said, is the schedule A structure insurance the coverage that will be used to pay off the reverse mortgage loan? Also, once the mortgage is paid does she retain the property that the house used to sit on or is that considered part of the property that the mortgage was for and does that go to the bank to be sold? This is a little confusing to me so any help or assistance is greatly appreciated.

 

[FlyingRon]

"Paying off the loan" is not usually a goal of your fire insurance. It pays for repairs based on the value of the structure. The payment will be made to her and the mortgagee. I take it she is not interested in rebuilding?

As for the clause on the property versus the structure, you'd have to quote that directly for us to have a clue. Typically once you build a house it is considered one with the land, unless we're talking about a trailer (manufactured) home.

 

[xylene]

I'm sorry your family is affected by this terrible disaster.

I can only imagine these difficult times. You want answers and to get back on track quickly.

Hold on, hold on tight. Be patient. Aid from the state and private entities will be coming. Avail yourself of local disaster clinics and local relief who will be able to personally help your family with all the needed filings and coordination between the various interests. You mothers advanced age will very likely put her as a top priority for receiving aid.

Good luck. You are good people to be so on top of the financial aspects of this catastrophe.

 

[adjusterjack]

is the schedule A structure insurance the coverage that will be used to pay off the reverse mortgage loan?

Coverage A is dwelling.
Coverage B is other structures.
The combination of the two will pay for any loss to structures.
Whether it goes to "pay off the loan" depends on the terms and conditions of the reverse mortgage loan contract. You'll need to read it. If you don't have it, contact the loan company. If the policy listed the loan company as Loss Payee, any check for the structures will be made out to her and the loan company. Again, the loan company will tell you how to handle that.

once the mortgage is paid does she retain the property that the house used to sit on or is that considered part of the property that the mortgage was for and does that go to the bank to be sold?

Once the loan balance is paid off, the loan company no longer has any right to the property so she gets to keep it.

Coverage C is contents (personal property). She'll need to submit a written inventory of everything that was in the house that was damaged or destroyed.
Coverage D is Additional Living Expenses for any costs she is incurring to live elsewhere.