Reverse Mortgage Options - A Lender Provides Some Direction
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A few weeks ago we wondered why some lenders were still promoting reverse mortgages carrying a 1.50% margin along side of newer, basically identical HECM products that carried only a 1.00% margin - a much better deal for the borrower. At the same time they promoted lower costs, higher cash availability and other benefits of the new HECM 100 loans, lenders trumpeted the continued availability HECM 150 loans offering “greater options for senior borrowers.”
We even checked with these lenders to see why a senior homeowner would “choose” a HECM 150 instead of a HECM 100 and no could give a rational reason why someone would make this choice.
We were reminded of this today when we saw this post from Next Generation Financial Services, a subsidiary of 1st Mariner Bank directing lenders in the field to “recommend the HECM 100 as the loan of choice to our senior clients.”
We have run extensive scenarios on all three of the monthly Reverse Mortgage programs listed above. Without a doubt the HECM 100 is, at present, the best loan of choice when working towards “Doing What’s Right for the Senior”. Whenever an application is requested from the field, if listed on the comparison and other documents as a HECM 150 or HECM Advantage, the application will be challenged by the home office to substantiate why the monthly HECM 100 was not used. The HECM 150 is only appropriate in the event the senior wishes an annual as opposed to a monthly interest adjustment.
In the complex, confusing world of reverse mortgages (made more so with frequent new product introductions), it’s refreshing to see a lender publicly cut through some of the confusion and give some straightforward direction.
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