One of the best selling points about reverse mortgages is the fact that seniors never have to worry about losing their homes…to the bank. But what happens to a reverse mortgage when you lose your house to a natural disaster like hurricanes Katrina and Rita?

An excellent article at Investors.com explores this issue and reveals that not even HUD and Fannie Mae have answers to many issues brought about by the hurricanes:

But what happens if your home is destroyed by a hurricane and you have no flood insurance or if homeowners insurance coverage is inadequate? Or, what if it takes ages for inspections and repairs? For those answers, all eyes are on the U.S. Department of Housing and Urban Development, which declined immediate comment for this column.

“It’s a very important issue,” says David Carey, product manager over reverse mortgages for Fannie Mae, and the investor in some 122,000 reverse mortgages. “We don’t know how it will be handled and we won’t know until HUD decides how it would like to handle each circumstance.” HUD is the issuer of more than 85% of all reverse mortgages.

The complete article is well worth reading and pondering. Then, you might want to read this timely and relevant post at MortgageNewsDaily.com, Time To Review Your Homeowners and Flood Insurance Coverage, as well.

A Few More Related Articles of Interest:

HECM Insured Volume Cap Reached

Other Reverse Mortgage Calculators

FHA - Federal Housing Administration

HECM Loan Database Updated Through January 2007

HUD Announces Additional Funding for HECM Counseling