Have We Seen The Last of The HECM 100?

The past week or so has been an interesting time in the reverse mortgage world.  Early last week, out of nowhere I received an email from Sun West that said they would no longer accept any HECM 100 submissions unless it was already in the current pipeline.  Surprised?… Yes. Shocked… no.  With the liquidity crunch the mortgage industry is experiencing, it was inevitable that it would eventually effect the reverse mortgage business. 

Over the next few days we saw everyone make adjustments to their HECM products. Here is the rundown as of August 23rd: 

  • Sun West had initially suspended offering the HECM but after seeing a competitor that still offered the product, it looks like they are offering it again.
  • Financial Freedom is still offering the HECM 100 and adjusted their pricing structure on all HECM products. 
  • Lender Lead Solutions has suspended offering the HECM 100 unless the loan was already in process.
  • 1st Reverse Financial Services is still offering the HECM 100 along with their recently released HECM Pathway which has an even lower margin.
  • Reverse Mortgage Lenders Network is still offering the product but has adjusted their pricing structure.

While some reverse mortgage lenders have or will pull the HECM product, it doesn’t look like it will stop lenders from releasing new products.  According to a newsletter from Financial Freedom, they are planning to release a fixed jumbo and HECM product to market soon.  LLS has mentioned that they are looking into releasing a new Libor based HECM product now that HUD has approved the use of the index.  David Peskin, CEO of LLS, also recently said that with the backing of KBC they will be able to develop new proprietary products.  Last but not least, Sun West also has plans to release their new Simple HECM product in the coming weeks.

So while it’s possible we may eventually lose the HECM 100, I wouldn’t be surprised if we start to see everyone release a HECM 110 or even a HECM 120 as soon as next week… so exciting.


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