So\u00a0the creditor went after it. Writs of garnishment were served on the lender,\u00a0Longbridge\u00a0Financial; the servicer, Compu-Link Corp.; and Capital One, where Desmarais had a bank account. The creditor’s argument was straightforward: Desmarais had already used some of the reverse mortgage draws for vacations and everyday expenses, not just home repairs. That meant, in the creditor’s view, the remaining funds in the line of credit had lost their homestead protection and were fair game.\u00a0<\/p>\n
The court did not agree. The key fact was simple. Desmarais had not requested any draws since the garnishment was served. He testified he had no plans to do so. The lender and servicer confirmed they had no obligation to send money until Desmarais asked for it. In other words, the money had not been requested or disbursed. The homeowner’s right to it\u00a0remained\u00a0contingent \u2013 and the court held that a contingency cannot be garnished.\u00a0<\/p>\n
The distinction the court made is the part that matters most for mortgage professionals. A HECM line of credit where the borrower controls when and whether to draw is\u00a0not the same as\u00a0a reverse mortgage structured with automatic monthly payments. The court said that if this had been a stream of scheduled payments, those payments could have been garnished. But a discretionary line of credit is different. The borrower’s right to those funds is conditional \u2013 it depends on a request that has not been made and may never be made. You cannot garnish a contingency.\u00a0<\/p>\n
The court also pointed to the federal statute behind HECMs, which exists specifically to help older homeowners stay in their homes by converting equity into accessible funds. Forcing a borrower to draw down a line of credit to pay a judgment would defeat that purpose. An Oklahoma court reached the same conclusion in a 2013 case called Bowles v. Goss, and the Florida court found that reasoning instructive.\u00a0<\/p>\n
Now, there is a limit to this protection. The court made clear that once a borrower voluntarily withdraws money from a HECM line of credit, the homestead shield can fall away \u2013 depending on what the money is used for. If the borrower pulls funds to repair or\u00a0maintain\u00a0the home, or to buy a new one, those funds may keep their protection. If the money goes toward something else, it is exposed. That is exactly what happened with the $250 sitting in Desmarais’s Capital One account. The court ordered that turned over to the creditor after finding those proceeds had lost their homestead exemption protection.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"So\u00a0the creditor went after it. Writs of garnishment were served on the lender,\u00a0Longbridge\u00a0Financial; the servicer, Compu-Link Corp.; and…\n","protected":false},"author":2,"featured_media":207338,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[28,30,29,95023,14559,84222],"class_list":["post-207337","post","type-post","status-publish","format-standard","has-post-thumbnail","category-florida","tag-florida","tag-florida-headlines","tag-florida-news","tag-hecm","tag-homestead-exemption","tag-reverse-mortgage"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/posts\/207337","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/comments?post=207337"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/posts\/207337\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/media\/207338"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/media?parent=207337"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/categories?post=207337"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-fl\/wp-json\/wp\/v2\/tags?post=207337"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}