We’ve seen jumbo reverse mortgage programs from pretty much everyone but all of them lacked a tenure payment… until now. The Reverse Select from EverBank was designed to give the borrower different options to accommodate individual needs. To accomplish this EverBank recently updated the product formerly known as the Prime Advantage to allow for a tenure payment as well as a variety of origination fee and interest rate options. These changes only affect the Reverse Select Fixed Rate product, not the adjustable rate product.
There are three different scenarios the Reverse Select was designed for:
- Rate sensitive borrowers – from my experience jumbo reverse mortgage borrowers are more concerned with the rate that they will be charged and the Reverse Select allows borrowers to pay a higher origination fee in exchange for a lower rate. The table below reflects how much the origination fee will reduce the rate. For example, if you have a borrower who is looking to receive a lump sum and is willing to pay 1.00% origination fee the rate would be 9.125% instead of 9.625%. If the borrower is willing to pay a larger origination fee the rate will become lower which you can see from the table below.
- For borrowers who want to receive a tenure payment or a combination lump sum with a tenure payment, the Reverse Select program charges an origination fee of 1.0% or more depending on the rate option selected. (see examples in the chart below)
- For those borrowers who are closing cost sensitive, they can still opt for a zero point origination fee (and no other closing costs).
Reverse Select Matrix
Remember, the Reverse Select program doesn’t allow the broker to charge any additional origination fees to the borrower. The broker is paid by EverBank Reverse based on the value of the home. According to Joe DeMarkey, Director of Corporate Development for EverBank Reverse, “We want our broker partners to always be financially indifferent as to which Reverse Select product the senior homeowner chooses.” With all of the negative attention that the reverse mortgage industry is experiencing right now, safeguards like this always seem to be left out.
Overall we continue to see reverse mortgage products like the Reverse Select, Flex Margin, and Equity Plus Advantage being designed to give brokers and borrowers the ability to structure loans to fit individual needs. Having products like these are great for originators because we all know that there is rarely a one size fits all solution for anyone.