One Reverse Mortgage has announced the launch its first proprietary reverse mortgage, the Home Equity Loan Optimizer, or HELO.
The HELO offers borrowers access to up to $4 million of their equity in a lump sum and comes with less restrictive property and transaction requirements, One Reverse CEO Gregg Smith told HousingWire.
“Our focus with this product was to broaden the market, to expand the pool of clients who could be served with a reverse-like product,” Smith said. “We really leaned on the traditional, forward market for our concepts in terms of where we needed to go product-wise, to step outside the FHA box.”
Unlike the FHA’s reverse mortgage, the HELO can be used on condominiums that are Fannie Mae-approved. It will also allow seller concessions on purchase transactions and be more flexible with unique property traits, like solar paneling.
Smith said the HELO can help borrowers consolidate their debts by paying them off at closing, something traditional mortgages allow but the HECM does not.
The HELO is now available through One Reverse's retail outlets, and the company said it will be offered to its wholesale partners by month’s end.
One Reverse Mortgage, a subsidiary of Quicken Loans, is the latest in a wave of lenders to release private reverse mortgage loans. While lenders have attempted to grow the proprietary market for years, not until recently has there been any real movement.
The momentum is a direct reaction to changes made to the reverse mortgage program by the U.S. Department of Housing and Urban Development last fall that effectively limited the amount of proceeds one could draw and the number of people who could benefit from the loan.
The new rules have stifled loan volume, forcing lenders to get creative in order to reach older consumers looking to tap their home equity.
Smith said the ability to provide consumers with more options is key.
“We know the opportunity is there, we know the audience is there, but we haven’t had the options, the programs, the solutions that they need or that they want,” he said, adding that he expects One Reverse to release different iterations of the HELO down the road.
“The clients’ needs will drive what we create,” he said. “I think proprietary has a big role to play in this market… I would say innovation is the wave of the future for this space and innovation can come in many different forms.”
“The energy and the momentum that is happening in the marketplace, the innovation in our space, has been well overdue,” he said. “It’s a good time and a good place to be right now.”