Death of the HECM 100?
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As the sub prime mortgage mess has unfolded over the last few months, reverse mortgages have gotten some positive press about being outside the fray and largely unaffected by the turmoil.
No more.
In the last week, several lenders and brokers have ceased origination of the new and popular HECM 100 reverse mortgages due to lack of demand from from Wall Street investors. The low margin HECM 100 is made possible through “securitization” - i.e. the packaging of individual reverse mortgages into investment securities sold competitively to investors. The traditional HECM 150, on the other hand, is sold to a single buyer (Fannie Mae) at a dictated margin of 1.50%.
The lower margin HECM 100 has benefited borrowers by allowing them to borrow more money at a lower overall cost.
For a few months - since the introduction of the HECM 100 in January 2007 until now - there was enough enthusiasm for these securities to keep the program alive and growing. But now, troubles in the mortgage market and the related credit crunch are taking their toll as investors have become averse to any type of mortgage investment.
One broker we contacted told us that the HECM 100 security market is “upside down” and that continuing with the HECM 100 would mean a loss to his company on each loan made.
Some lenders are continuing with the HECM 100 for now but it is unclear how much longer HECM 100s will be available or whether the HECM 100 will rebound when credit markets stabilize. Be aware that the same market dynamics are impacting availability of HECM 125 loans as well.
For now the best advice is to call around to several lenders to find out what’s available. We were able to confirm with BNY (800-269-6797 originator of the HECM 100) and Wells Fargo (800-233-4757) that they continue to offer HECM 100 loans as of today (8/22/07).
If you are aware of other lenders continuing to offer the HECM 100, please leave a comment below. Thanks
Article Series - hecm100
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August 22nd, 2007 at 11:07 pm
Countrywide is still offering the HECM 100.
August 23rd, 2007 at 9:10 am
Reverse mortgage still offer the investor the safest home mortgage available and they have to stop thinking like mortgage bankers who are lending on 80-100% of home value and having the loans go south. I have heard of no reverse mortgages that go bad. Lending 45-60% of home value with compounding interest and a government guarantee to a home owner who has lived in there home for years and has only few years left doesn’t sound like a bad investment to me. Those who cut the HECM 100 will be faced with more aggressive investors after that compounding interest and guaranteed profit.
August 24th, 2007 at 7:34 am
JB Nutter is still offering HECM 100
August 29th, 2007 at 7:37 am
Allied Mortgage Group is still offering HECM 100. Our Florida office is originating loans in
Florida, Alabama, and Georgia, while our home office originates in many states.
1-800-590-0571
September 2nd, 2007 at 11:25 am
All American Reverse Mortgage offers the HECM 100 in CA, WA, OR, FL, IL, AZ(pending)
Don’t be lured into anything other then either a HECM 100 or the HECM fixed.
Also a wide variety of jumbo reverse mortgage products.
800-201-0343 x 227
September 12th, 2007 at 3:58 pm
My “Reverse Mortgage Specialist”, just advised me she received an alert :11/09/07
Financial Freedom will go to HECM 150 for all loans after Oct.22,2007. She advised me to not to try to
change from the HECM Monthly Advantage as closing is scheduled Sept 24,07.
What should a person do ?