Bloomfield, N.J.-based top-five reverse mortgage lender Reverse Mortgage Funding, LLC (RMF) announced today the launch of a new variation of its Equity Elite proprietary reverse mortgage offering with a line of credit (LOC) feature. The product, which was previously announced in July, is being rolled out in two states with additional states to be added in the near future, according to the company.
Available to seniors aged 60 and older, the Equity Elite Line of Credit aims to present a higher value proposition to potential borrowers when compared directly with other proprietary lines of credit product options, the company explains.
Addressing retirement shortfalls
“Older Americans enjoy the comfort and security of having an emergency line of credit in place to help fund the unexpected. And let’s face it, we are living in unexpected times,” said David Peskin, president of RMF in a statement announcing the product’s launch. “But traditional home equity loans can have shortfalls for those age 60 and older — as lending requirements are stricter and minimum monthly payments are mandatory. So, we designed the Equity Elite Line of Credit option with flexibility and more than just one type of customer in mind.”
The added economic uncertainty which has been caused by the ongoing COVID-19 coronavirus pandemic makes now an ideal time to launch a product aimed at providing additional cash flow for seniors who need it, Peskin adds.
“We are thrilled to be able to bring our proprietary line of credit product to the table at a time when so many older consumers are looking for a financial safety net and added stability in their retirement plan,” he said.
Product features
In addition to being designed with the features and benefits of a reverse mortgage and a Home Equity Line of Credit (HELOC), the Equity Elite LOC option also offers a reusable line of credit that grows at 1.5% annually for seven years. There is no cap on percentage of loan proceeds drawn at closing, though there is a 25% minimum draw.
The loan also features access to funds of up to $3 million for higher value homes, and the lack of a mortgage insurance premium (MIP) can translate into lower upfront costs. Unlike a traditional HELOC, there is also no pre-defined loan maturity date.
“The launch of this product is timely and helps to satisfy the needs of the public,” said Mark O’Neil, national sales leader of the wholesale and correspondent business channel at RMF. “RMF’s top priority is to expand its availability across the nation. We see this product as an attractive alternative to HELOCs and want as many to benefit as possible.”
RMF’s Equity Elite LOC product is available first in California and Florida, respectively, but the company says that it plans to roll it out to additional states “in the coming months.”
Added necessity
Peskin previously told RMD that expanding RMF’s proprietary product offerings is a continuing priority for the remainder of 2020.
“Expanding our proprietary reverse mortgage product offering is a priority,” Peskin told RMD in July. “Our Equity Elite ‘Line of Credit’ program is set to rollout later this summer, and we feel like the timing is just right.”
The ongoing impact of COVID-19 makes the additional necessity for products that can facilitate aging in place more pronounced, Peskin added at the time.
“Homeowners are rethinking their long-term care plans in the existing COVID environment — aging in place is becoming an even bigger priority considering the impact that the pandemic has had on individuals in nursing homes and assisted living facilities around the country,” Peskin previously said. “The Equity Elite Line of Credit can provide incredible advantages to those choosing to utilize home equity to fund ‘aging in place’ needs, which can include home health care.”
Competitive landscape
RMF is the latest major proprietary reverse mortgage lender to add a line of credit product variation. In 2018, Finance of America Reverse (FAR) introduced HomeSafe Select featuring a line of credit which initially had a growth feature. That feature was removed in January of 2019, though was reintroduced by the end of that same year.
In November 2019, Longbridge Financial introduced a line of credit variation of its “Platinum” line of proprietary reverse mortgages, and expanded its availability to the state of Florida earlier this year.
Multiple reverse mortgage lenders have also emphasized that the line of credit feature found in reverse mortgages has been enhanced as a value proposition since major financial institutions such as JPMorgan Chase and Wells Fargo have pulled back on their own HELOC offerings because of the pandemic.
RMF currently stands as the number two reverse mortgage lender in the country, recording 3,574 Home Equity Conversion Mortgage (HECM) endorsements over the 12-month period ending in July, 2020 according to data compiled by Reverse Market Insight (RMI).
