HECM Product Changes Spurred Market Shift & Innovation
Necessity is the mother of invention. For the reverse mortgage industry one could say that necessity has pushed us into reinventing the image and application of the Home Equity Conversion Mortgage.
One could argue that the first 15 years of the HECM were simple. A straightforward product, few complications, and generous qualification guidelines for seniors seeking access to much-needed funds in their non-working years. Without reciting the litany of product changes and regulatory overlays it is safe so say that today’s reverse mortgage has been slowly transformed into a loan that is expanding its reach while facing a shrinking pool of eligible borrowers…
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2 Comments
Looking at the past includes using comparative language like “HECMs have never been cheaper.” But is that even true?
Before October 4, 2010, ongoing MIP was only 0.5%. In fiscal 2009, interest rate margins were at all time lows. Few HECMs today will see their total costs including MIP and interest cheaper today than for those HECMs originated in fiscal 2009. In that same period, lenders were not charging borrowers for upfront MIP.
So looking at the facts, we are not educating; we are irresponsibly selling our product.
Hey! I am looking for recent HECM facts and guidelines. Can you help me? It would be great if you can share recent facts about HECM product.