Despite a few reverse mortgage lenders still offering the HECM fixed product in Illinois, both Bank of America and Financial Freedom suspended the product due to the Illinois High Risk Home Loan Act (HRHLA).

HRHLA applies to all closed end loans and requires lenders to compute the ratio of closing costs to loan amount or, in the case of a reverse mortgage, principal limit, in an effort to identify high-cost loans.  Closing costs which exceed 5% of the principal limit are considered high-cost and is the reason lenders have been pulling the product. 

In an email from Marve Stockert, President of the Illinois Association of Mortgage Professionals, he said:

As to the fixed rate on HECM Loans, we are aware of it and already working on the legislation to get it changed. It will take a law change and if we can’t get it attached to SB268 that is an open bill in the Veto session in the next three weeks, then it will be forced to be delayed until January.

As soon as we have all of the language we will let the membership know, to start calling their legislator

Note: h/t Scott Tucker for the information.