How An Unpaid $336 Insurance Bill Led To A Big Island Woman’s 9-Year Fight To Keep Her Home … Eleanor Fernandes is one of growing number of Americans whose reverse mortgages have unraveled, in some cases because their insurance lapsed and servicers bought much more expensive coverage on their behalf.
Eleanor Fernandes got a reverse mortgage in 2008 to convert the basement of her home in Papaikou, just north of Hilo, into a sewing room where she could pursue her long-time passion for making quilts and feathered hats.
But three years later, her hurricane insurance provider told her mortgage servicer that she had not paid her premium. That led the servicer, which requires homeowners to protect their property, to buy insurance on her behalf – but at a rate eight times what she had been paying, according to her attorney.
Soon, the much higher insurance payments helped drain what was left of her mortgage proceeds and the servicer, James B. Nutter & Co., advanced her an additional amount to cover the cost. She was in default, and in 2013, Nutter foreclosed. After many twists and turns, the case still has not been resolved.
Fernandes, 82, is one of a growing number of Americans whose reverse mortgages – aggressively marketed in the 2000s as a risk-free way to live on a house’s equity – have faced foreclosure because they failed to pay insurance or property tax.
