Pentagon Federal Credit Union Offering Reverse Mortgage Without Origination and Servicing Fees to Members
March 21st, 2010 | by admin Published in News, Reverse Mortgage, Sun West | 11 Comments
Pentagon Federal Credit Union (PenFed) and Sun West Mortgage Company (SWMC) announced a joint initiative that allows PenFed to offer reverse mortgage services to its members.
PednFed will initially market the Federal Housing Administration’s reverse mortgage program to its members in Washington, D.C., Maryland, and Virginia, with plans to roll it out nationwide after the pilot is complete.
The credit union will offer its members a HECM without an origination fee and the typical monthly servicing fee to make additional home equity available to the homeowner said a statement. “We have eliminated both of these fees because PenFed is committed to providing the best value to our members,” says Shashi Vohra, vice president of business development for PenFed. “PenFed’s HECM comes with no origination fee, no servicing fee, and a lower rate than is offered by most other financial institutions.”
As part of the initiative, SWMC will provide systems to originate and service the loans said Pavan Agarwal, executive vice president of Sun West. “We work with numerous providers of the HECM product, and we believe PenFed’s approach is a revolutionary, first-in-the-nation development. The bottom line is that seniors can now access their home equity at a much lower cost.”
“The reverse mortgage could be an excellent way for many seniors to supplement their income. We have removed the majority of the upfront fees, and we offer a very competitive interest rate on the existing HECM reverse mortgage product. Overall, we believe this is an excellent opportunity for our members,” stated Mr. Vohra.
PenFed will be able to offer the product to more than 950,000 of its members who have assets in excess of $14.5 billion. The credit union provides worldwide service to Army, Air Force, Coast Guard, Department of Defense, and Department of Homeland Security personnel; members of the VFW; employees or volunteers of the American Red Cross; and others in the military and their families.
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March 21st, 2010 at 4:44 pm (#)
About eight months ago you cited this product and PenFed. Back then we knew far less about it than we know today. Back then there were rumors that one of the RM Big Five lenders was considering doing this.
I wonder how some of the discounters who mock on this website will feel about this competition. PenFed will have a distinct advantage over the vast majority of us.
I do not believe they currently provide a fixed rate HECM.
March 22nd, 2010 at 5:38 am (#)
I agree, however when the client see how much more funds they can realize, I am not sure if not offering the fixed product will be an issue. Homes here in Fla ( and elsewhere) have loss so much value and so many seniors are ” hurting” so this definitely is tough competition”
March 22nd, 2010 at 6:27 am (#)
I had a borrower last summer who had made application with me but when he found out about the PenFed “no origination fee” he decided to go with them instead. We assigned the case number and wished the borrower good luck. Five months later, when PenFed had still not been able to close the loan, the borrower came back to me and we closed the loan in a week.
March 22nd, 2010 at 7:56 am (#)
I wouldn't worry too much about being able to compete with them. If you have access to a lender that has eliminated the SFSA, you'll be all right. I just ran a scenario on their website and the 5.56% fixed rate HECM is providing more than their “PenFed HECM”.
March 22nd, 2010 at 11:20 am (#)
I have already eliminated my origination fee and using Genworth- have no service set aside fee. Those 2 make me very comptetive!
March 22nd, 2010 at 1:27 pm (#)
>>I wonder how some of the discounters who mock on this website will feel about this competition
I haven't heard any of the discounters mocking anybody else here.
PenFed really isn't that competitive, because many of the discounters:
Have already reduced their origination fee to 0
Are paying most 3rd party costs (everything except FHA's insurance premium)
Offer the fixed program, with no monthly service fee
That business model allows them to be profitable, and provides more money to the Seniors.
Just type “reverse mortgage” into google and you'll those Lenders at the top of the first page, usually with the title “NO FEE Reverse Mortgages”.
March 23rd, 2010 at 5:46 am (#)
Does anyone know waht interest rate they are charging for a no origination/ no SFSA reverse mortgage? All the article said was a competitive rate.
March 23rd, 2010 at 10:06 am (#)
These companies are killing the industry and those trying to make a living but at least its a better deal for the seniors.
March 23rd, 2010 at 3:17 pm (#)
5.56%
March 24th, 2010 at 6:14 am (#)
Well, that surprised me. I thought they would have raised it a little to offset the loss. For them to still do a 5.56% and offer no origination and no SFSA, well, I guess I am going to have to rely on my stellar customer service attributes to win them over because I cannot compete if only comparing costs and benefits.
March 24th, 2010 at 1:14 pm (#)
Well, that surprised me. I thought they would have raised it a little to offset the loss. For them to still do a 5.56% and offer no origination and no SFSA, well, I guess I am going to have to rely on my stellar customer service attributes to win them over because I cannot compete if only comparing costs and benefits.