First LIBOR Based Reverse Mortgage Announced
October 1st, 2007 | by admin Published in LLS, Products, Reverse Mortgage | 7 Comments
Lender Lead Solutions officially announced that they plan to offer a LIBOR based HECM product to their brokers. Back in July, HUD approved the use of the LIBOR index and lenders recently started talking about offering LIBOR based products ever since the HECM 100 started to disappear.
“Making the transition makes perfect sense, the LIBOR-based HECM provides brokers added margin while giving them the flexibility to structure rates and loan closing costs to meet the individual needs of borrowers,” said David Peskin, chief executive officer of Lender Lead Solutions. “The migration to the LIBOR index will be the next big trend in the reverse mortgage industry. Its attractive pricing is better for our brokers and creates less interest rate risk for lenders like us.”
Earlier in the year LLS released their Flex Margin program which gave brokers the same kind of flexibility with adjusting margins. It looks like they are hoping the LIBOR based HECM will allow that same kind of flexibility. “Up until 2007, all HECM loans were originated using a 150 basis point margin. In January, that all changed when the industry developed flexible pricing margins,” stated Peskin. “Today more than 60 percent of the HECM loans originated have a 100 basis point margin. However, as a result of the current secondary market environment, lenders have either had to reduce their payout to correspondents or discontinued offering the lower margin options such as the 100. Now with the launch of the HECM based LIBOR alternative, a lender can offer clients a lower margin, like the 100, and still be compensated for their efforts.”
While there are no exact details on the product, LLS mentioned that they are waiting for the final Mortgagee Letter to be distributed prior to formal rollout of the LIBOR-based HECM.
Technorati tags: Reverse Mortgage, Reverse Mortgage News, HECM, Lender Lead Solutions, FHA, HUD
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