Bank of America Rolls Out Lower LIBOR Margin and Fixed Rate Products
April 5th, 2010 | by admin Published in Bank of America, News, Reverse Mortgage | 3 Comments
As more lenders continue to release updated products to remain competitive in the marketplace, Bank of America announced a few changes to its reverse mortgage products. “Bank of America is dedicated to offering products that are most beneficial to the customer,” said the company in a message to brokers late week.
Effective Monday, April 5, Bank of America joins MetLife and others by offering a fixed rate HECM with a $0 servicing fee at 5.56%.
The company also updated its LIBOR product offering by lowering monthly margins to 175 and 200, from 225 and 250 respectively. The adjustable rate LIBOR products require a minimum servicing fee of $30 said Bank of America.
The company said it intends to maintain pricing for the LIBOR 225 and 250 to both our closed-loan and broker partners through April 9, 2010 (last day to lock). Any unlocked loans in the pipeline will require a re-disclosed GFE and MBFA in order to be eligible for any price improvement.
- Related Posts
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- Bank of America Paying Half of MIP on Fixed Rate Reverse Mortgages
- Bank of America Offers LIBOR Reverse Mortgage Product
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April 5th, 2010 at 3:24 pm (#)
Although the fixed rate changes are welcomed, these adjustments are even more welcomed. Although profits and financial rewards are currently higher on fixed rate HECMs, many seniors should not be getting them. A significant group of seniors would be far better off with the variable rate product.
Unfortunately too many originators do not recognize which product is better for the senior. We like leaving the decision up to the seniors; however, they do not know the product and because too few originators have ever had a HECM, they are sort of lost in the selection criteria decision tree.
Atare Abgamu had a great article in the Reverse Review on the use of HECMs in business. Unfortunately he merely scratched the surface. Like all HECMs, their main benefit is found in cash flow to the borrower. It is this characteristic that should be explored with the senior and how paying down the line of credit has few negatives and many positives. On the other hand paying down a fixed rate HECM is probably not the best idea even though it would say costs.
Too many times I have attended seminars where the loan originator goes on and on about the unique growth feature of the HECM line of credit. Unfortunately the presenter rarely provides examples of how a line of credit may be preferable to closed end HECMs. There is little doubt more seniors would get HECMs if they understood how the line of credit works.
Good job Bank of America in driving down the cost of a adjustable rate HECM.
April 6th, 2010 at 8:48 am (#)
Updated post to reflect a rate of 5.56%, there was a typo which said the fixed rate was 5.65%.
April 6th, 2010 at 3:48 pm (#)
Updated post to reflect a rate of 5.56%, there was a typo which said the fixed rate was 5.65%.