Inventory
info icon
Single family homes on the market. Updated weekly.Powered by Altos Research
721,576-14142
30-yr Fixed Rate30-yr Fixed
info icon
30-Yr. Fixed Conforming. Updated hourly during market hours.
6.97%0.01
MortgageReverse

FNMA’s Reverse Mortgage Pricing Changes Worry Industry

image Last week the Fort Mill Times published a great article detailing how the changes in Fannie Mae’s pricing is causing problems in the industry.  In Changes in reverse mortgages worry industry, Adrian Sainz writes that industry veterans are concerned that the change to “live pricing” can confuse seniors and cause them to question whether they’re getting fair treatment.

“Instead of (Fannie Mae) announcing the problem and then pitch in to help find an alternative, what do they do? Like normal, drop a bomb, this time on the reverse mortgage industry and our senior citizen population,” said John Smaldone, senior vice president for reverse mortgages for AAXA Mortgage, said in a letter to U.S. Rep. John J. Duncan, R-Tenn.

Last month – and without any real warning – Fannie Mae made changes that allow for higher margins for reverse mortgage lenders. Simply put, margins are the interest rate spreads a lender makes on the loan. So, the higher the margin, the higher the interest rate the borrower pays.

Worse still, under the new rules the margin – typically 2 to 3.5 percentage points – can change from the time a borrower submits an application and the loan is funded, which can be up to 120 days.

The borrower signs a form from the lender projecting the maximum amount of money the borrower may receive. But with rates that can change, the senior will not really know how much they can borrow until closing, or days before. That makes the disclosure form practically useless, Smaldone said.

“The reality of the draconian move by Fannie Mae is to create uncertainty in the reverse mortgage market place,” real estate attorney and Florida International University law professor Dennis Haber wrote on his blog.

Amy Bonitatibus, a Fannie Mae spokeswoman, said the pricing adjustments are meant to bring more investors and more cash flow into the reverse mortgage industry.  In theory, more investors in the marketplace should help drive margins back down in the long run, but it’s unclear when that will happen.

Changes in reverse mortgages worry industry

Technorati Tags: ,,,,,,

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

Latest Articles

Training to lead: How to build leaders in your mortgage business 

Creating an effective leadership training program doesn’t just benefit your organization’s bottom line; it empowers your people, fosters loyalty, and creates a sense of purpose. Here’s a simple guide to creating a program that builds leaders from within—one that not only supports your team’s growth but helps them unlock their potential and lead with confidence.

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please