It's the first ruling of its kind in Florida – and there's a catch
A Florida appeals court just decided that creditors cannot force homeowners to tap their reverse mortgage line of credit to pay off a judgment.
The ruling, handed down on March 25, 2026, by the Fourth District Court of Appeal, is the first of its kind in Florida. And if you work in reverse mortgages, it is worth paying attention to – because it draws a line that will shape how HECM lines of credit are treated when creditors come knocking.
Here is what happened. A company called Jhelum Enterprises held a judgment of about $55,000 against a business called Oceanside Automotive Service and Towing. The court found that the company's sole officer, Norman Desmarais, had fraudulently moved assets around to dodge the debt, and held him personally liable. That was back in 2011. Fast forward to 2018, and Desmarais took out a home equity conversion mortgage with a line of credit. He refinanced into a new HECM in 2022. By January 2024, his available line of credit sat at roughly $62,000.
So the creditor went after it. Writs of garnishment were served on the lender, Longbridge Financial; 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.
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 remained contingent – and the court held that a contingency cannot be garnished.
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 not the same as a 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 – it depends on a request that has not been made and may never be made. You cannot garnish a contingency.
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.
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 – depending on what the money is used for. If the borrower pulls funds to repair or maintain the 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.
As it stands, the decision gives Florida reverse mortgage lenders and servicers clear appellate guidance: when a borrower has a discretionary HECM line of credit and has not made a draw request, there is no obligation to disburse in response to a garnishment writ. For anyone structuring, servicing, or advising on reverse mortgage products in Florida, this is a case to keep on file.
