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Mortgage

Liberty Home Equity unveils proprietary reverse mortgage

Becomes the 6th lender to bring non-agency offering to market

Five months ago, word circulated that Liberty Home Equity was on the brink of releasing a proprietary reverse mortgage product, looking to take part in the explosive growth this market has seen in the last year.  

And now the talk appears to be true, as the reverse mortgage division of Ocwen Financial announced the launch of EquityIQ on Friday, making it the sixth HECM lender to bring a non-agency reverse mortgage to market in the last 18 months.

The EquityIQ offers homeowners 62 and older the ability to access up to $4 million of their home’s equity with a fixed-rate, full-draw loan.

Like the federally insured HECM, Liberty’s loan has a non-recourse feature, meaning that borrowers are not liable for the difference should the home depreciate, and the amount of the loan surpass the home's value.

Also like the HECM, EquityIQ requires homeowners to pay off any existing liens against the property at closing, and to keep up with homeowner’s insurance and property tax payments.

Liberty said the new offering is now available through its retail and wholesale channels for California borrowers only, but it expects to expand to four additional states within the next few weeks and continue to grow from there.  

According to the lender, the EquityIQ is “designed to be a smarter solution” than a traditional HECM or its proprietary rivals because it offers access to more funds for borrowers with higher-value homes, has low upfront costs with no mortgage insurance premiums and comes with easier eligibility requirements for condos and home purchases.

Liberty President Mike Kent told HousingWire that the product’s strong loan-to-value ratios help it stand out from its competitors and make it more comparable to the HECM.

Kent also said that while the HECM is a solid offering, private reverse mortgage products like the EquityIQ can help a number of seniors who can’t derive as much benefit from the federally insured product.

“A HECM is great answer for a lot of people, but if the value of your home exceeds the maximum loan amount, then those additional proceeds remain untapped, and for some borrowers that could make a significant difference,” Kent said.

Kent added that 2017 changes to the HECM program opened the door for greater innovation on the proprietary front.

“We’re not looking to HUD to be the great innovator of equity release products for seniors,” Kent said. “I think what they have now is a good sale, solid product and it fits the needs of a good number of seniors, but there is also a good number of seniors that it doesn’t help. I think that’s where the private market can come in and innovate and make a difference.”

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