Israeli startup seeks to fill U.S. HECM opportunity gap

Consumers, like all such agreements, make sure that you have received appropriate, competent, and independent legal and other advice before entering into this agreement. Since it is not a mortgage (as cited in the company’s summary of the agreement), its terms would typically be unfamiliar to most consumers.

Some may not feel comfortable about this product. Here are just a few of the possible reasons why. The quotations are taken from small and lighter type on the company’s landing page at https://sixtyfive.com/

1) The senior must retitle the property in the name of a trust that the company holds an interest in. “Assuming your home qualifies, you will need to transfer your home to a trust to initiate the program…. Under the trust, we are automatically allocated units of value.”

2) There are two fees. The first is the management fee. It is accrued monthly. This fee is calculated by multiplying the balance due from the prior month plus the current amount paid for the month (before reduction for the servicing fee) times a variable rate interest element. That rate is Prime plus 400 bps (i.e., Prime plus 4%). Unfortunately “Prime” is not defined on that webpage. “The management fee will vary based on market conditions (Prime+400 bps).”

3) The other fee is a so called “servicing fee.” It is a fixed amount and REDUCES the monthly payment to the participant. “The servicing fee is a fixed amount that is withheld from each month’s funds made available to you.”

4) This was a rather interesting statement: “However, your total fees will not exceed 18% on an annual basis.”

5) “SixtyFive will re-assess your eligibility for the program every three (3) years.” This implies that the company can cancel the agreement after the first three years and if does not do so, it has the right to do so once every three years thereafter until the agreement terminates.

6) This was a rather interesting statement: “However, your total fees will not exceed 18% on an annual basis.”

7) Still wondering if the amount due to the company is interest, just read the following from the so called “Tax Disclosure” section: “Please note that SixtyFive’s product is not a mortgage loan. Due to the unique nature of SixtyFive’s program, the tax benefits associated with interest payments on a traditional mortgage will not be available to you. To understand the tax consequences of using SixtyFive’s product fully, you will need to contact a tax professional. SixtyFive is unable to provide tax related advice to you.”

This is no HECM or even an equivalent. One wonders if the company is sufficiently funded to make the required payments timely or at all?

Who is the regulator over this product? We know HUD certainly is not. What federal agency is? If regulated by the state only, does that regulator have the staff who are capable of truly overseeing these products?

I have only cited a few of the company’s summarized terms of this agreement and may have missed terms that are essential to any decision making about this product.

Consumers beware.