Generation Mortgage Company has launched a new app in the hopes of repositioning the HECM as a flexible financial tool for retirees. Called nu62, the app graphically plots the correlation of home equity to personal consumption to home equity credit growth over a specific period of time. The idea is to provide users with a new view of aging in place, demonstrating through dynamic charts how borrowers can utilize home equity based on consumption preferences.
“Nu62 shows brokers and borrowers both the risks and rewards of different consumption patterns,” says GMC President and CEO Colin Cushman, who worked as director of portfolio analysis for the FHA before joining GMC in February. “It makes the options transparent and easy to understand for the first time ever.”
The app asks users to enter their name, age and home value; select the type of loan they prefer, either the Saver fixed or the Standard ARM; enter the total for any existing liens on the property; and then select the rate at which they plan to consume the loan proceeds. The data is compiled in a graph to illustrate how each of these factors impacts the borrower’s access to equity.
“It’s a multidimensional, customized planning tool designed to help seniors plan for the consumption of their home equity,” Cushman says, adding that the “consume later” function caters to the idea of using the HECM as a financial planning tool. The graph also illustrates the difference between a traditional and reverse mortgage as a point of comparison for the user.
Cushman, who assisted in the design of the Standard and Saver products while working for the FHA, says the launch of nu62 coincides perfectly with the recent moratorium on the fixed-rate Standard HECM. Nu62, he says, will help reverse professionals educate potential borrowers about the nuances of the adjustable-rate HECM. He says that although the new app took six months to develop, “It’s been in my head for six years.”
“We need to expand the marketplace beyond the needs-based consumer,” he says. “What we’ve been missing is a comprehensive way to understand the loan and explain it to borrowers. This will facilitate that process.”
GMC released the app to its partner community last month, and the company said it plans to make it available to the industry at large in the coming months.