Fixed-Rate Reverse Mortgage To Soon Be Available
September 24th, 2007
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One of the big financial issues which dominates the news concerns the mortgage meltdown. The point is NOT that we have a subprime problem, but rather than we have a problem with toxic loan products in general. No one with a fixed-rate loan is worried about negative amortization, stiff payment re-sets or rising mortgage rates.
This brings us to the decision by lender Financial Freedom to offer a fixed-rate reverse mortgage. It seems that borrowers are not the only ones who have discovered the joys of fixed-rates. Investors too, in growing numbers, have the same idea.
“We’ve worked extensively with industry leaders to clarify the rules governing fixed-rate HECMs in order to achieve a product that meets seniors’ needs and which we believe will lead to the development of a strong secondary market for the product,” said Michelle Minier, CEO of Financial Freedom. “We expect that other lenders will embrace and replicate this closed-end, fixed rate HECM product, making it the industry standard fixed rate model.”
“For the industry,” says Financial Freedom, “having a reverse mortgage that appeals to the secondary market is critical to the long term success of the product. The ability to achieve strong, reliable execution in the secondary market ultimately lowers costs for the consumer. It also creates more product access as more lenders, attracted by the viable business opportunity begin to offer the products on their platforms.”
The company also says that it plans to launch a fixed rate proprietary jumbo in Q4.
While a fixed-rate option is significant option for reverse-mortgage borrowers, as always one must look at all rates and fees and consult with an independent attorney who specializes in elder law before signing up for any reverse mortgage product.
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September 24th, 2007 at 9:17 pm
I have to say that had you done your research, you would have found that a HECM Fixed has already been on the market now for several months. Any lender that offers HECM’s can offer a HECM Fixed, and in no way is Financial Freedom the leader in the industry to release this product. It would be nice if the topics here could lean more towards the education of what a reverse mortgage is, how it works, etc., rather than utilizing your blog as an advertisement for a specific lender.
September 24th, 2007 at 11:08 pm
Thanks for your note.
First, I have posted a number of items regarding individual lenders. It’s hardly an endorsement when a posting says that prospective borrowers should “look at all rates and fees and consult with an independent attorney who specializes in elder law before signing up for any reverse mortgage product.”
Second, the public should know that fixed-rate ARMs are a reverse mortgage option. If a big reverse lender is putting more emphasis on fixed-rate products then that’s important.
Third, the creation of products with value in the secondary market means that more product will be available to borrowers.
Fourth, the posting does not say that Financial Freedom is the only company to offer a fixed-rate reverse mortgage, merely that it is offering one.
The point of the posting was that investors are moving away from adjustable products — why else introduce a fixed-rate loan?
September 25th, 2007 at 4:32 pm
Please keep in mind, however, that this is not a new product and has been out for a while now; and FHA released this program, not Financial Freedom. It is very nice that the FHA is allowing a fixed rate, but when comparing the money you can receive with a HECM 100 or a HECM 150 to a HECM Fixed, you will find that the HECM Fixed offers the least amount of money.
September 25th, 2007 at 5:06 pm
No one said this was a new product, merely that it was new to a given company. Neither the term “first” nor the word “new” appear in the original post.
As to how much money one can receive, that is an important point. The related issue concerns the cost of those dollars. As many borrowers are discovering, there can be significant risk and huge additional costs associated with variable-rate loan products.