Virtual Bank is taking a different approach to reverse mortgages than most other lenders by moving away from the FHA standards we are all used to.  Instead of offering the HECM product they decided to offer a proprietary product that has a lending limit of $417,000.  They are hoping to capitalize on the market in between the HECM product and the jumbo proprietary products.  Unlike the HECM product which is an FHA product the Life Plan™ product is underwritten like your standard FNMA loan.  Below are a few of the details on one of the three programs they offer:

LIFE Plan

• Based on 1 year Treasury CMT (Adjusted Monthly)
• Margin = 200
• Caps – 6% for the life of the loan
• Max Loan Amount = $330,600 (based on age)
• Purchase or Refinance
• Owner Occupied Only
• Single Family, Condos, Co-Ops (NY City only)
• One Appraisal needed
• Servicing – $30/month
• Broker Fees – 2% origination fee
• Virtual Bank Fee – 2% lenders fee

Along with the “Life Plan”, they are also offering a “Prime LIFE” and “Mega LIFE” product.  While I like what Virtual Bank is trying to do I think they are missing out on a good amount of business by not offering the HECM product.  If you are curious on how the ”LIFE Plan” and the rest of the LIFE suite of products stacks up against the HECM, check out the web site where they have a calculator that will compare all three products against the HECM product.  Later this week I will feature the other two products they offer.

Cheers!

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