Originators See Promise in New Private Reverse Mortgage Options

While remaining cautiously optimistic, reverse mortgage originators are excited about the industry’s new and expected proprietary products.

In recent weeks, Reverse Mortgage Funding launched the Equity Edge, targeted at borrowers aged 60 and up and with homes valued at $700,000 or more; Longbridge Financial announced plans for multiple proprietary reverse mortgages, starting with a wholesale fixed-rate loan for borrowers looking for low upfront costs; and Finance of America Reverse rolled out a “Flex” version of its HomeSafe jumbo mortgage, allowing borrowers to access 60% of proceeds up front and the remaining 40% monthly over five years.

Jesse Brewer, branch manager for Nationwide Equities in Las Vegas, said he hopes the new reverse mortgage products will be a catalyst for big industry players to get more invested.

“What we’re most excited about is that well-capitalized and well-run organizations are demonstrating their long-term commitment to the product,” said Brewer, who sells mostly Home Equity Conversion Mortgages but does market FAR’s HomeSafe option to borrowers who qualify.

Phil Goss of Churchill Mortgage in Glendora, Calif., said he welcomes all of the products being announced.

“I think having more options for seniors is nothing but a plus,” he said.

On a practical note, Ellen Skaggs, everse mortgage national sales manager for New American Funding in Tustin, Calif., said integrating a new loan’s software, such as RMF’s Tango system, with her current ReverseVision software might be a potentially difficult undertaking. Despite this, she’s still very interested in the products.

“If they really are going to be the best thing for the client, then we want to offer them,” Skaggs said.

Karen Rayfield, a loan officer with Retirement Funding Solutions in Virginia Beach, Va., said it’s too early to predict whether any of the new or expected products will compete with the HECM.

“These new proprietary products and those still in development will have a place, but it’s too early to predict the impact on the government-insured HECM,” she said. “I am heartened, though, that we’ll have an additional array of products to meet needs that can’t be met with the HECM.”

For a proprietary reverse mortgage to be competitive with the HECM in his territory, Goss said he would love to see two options in particular: one for non-Federal Housing Administration approved condos that are valued at less than $500,000, and one with higher principal limit factors.

Without those segments being met, Goss predicts his concentration will remain on selling HECMs, something he has always focused on because of the property values in his area.

Brewer, too, said that the new reverse products likely would not become his bread-and-butter.

“HECM will continue to be a main resource,” he said. “Proprietary mortgages have not yet become applicable or attractive to the majority of the reverse mortgage marketplace, but I hope to see that we’ll have a couple of options available and see some competition in the space. It will be good for the industry and, especially, our clients.”

Written by Maggie Callahan

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