Reverse Mortgage: CMT or LIBOR?

Last week lenders offering CMT based HECMs either adjusted their pricing or released new higher margin products… why? The last company buying CMT product, Fannie Mae, just pulled back on their pricing. I’ve been told by several people that their previous pricing was almost too good to be true, and is most likely the reason you saw Financial Freedom eliminate their LIBOR products and switch back to CMT. But now that their pricing has been pulled back, should you be taking an application for a CMT product or LIBOR? Hmmmm… lets take a look.

Below is a summary of a 70 year old borrower with a $200,000 house and no mortgage balance:image

In this scenario the CMT based HECM will get the borrower an extra $212, so that’s the better choice right? Maybe. Remember the LIBOR products are paying you more on the back end which gives you the flexibility to structure the deal for the borrower (pick up some costs, ect.). Are most of you still originating HECM products or LIBOR? Survey below. Click to RMD to vote or see the results.


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