Mr. Kelly has hit the nail squarely on its head.

Any talk of lowering the lending limit (its correct HECM name) should be delayed until there is a thriving secondary market of some magnitude. Last year some industry leaders were promoting the idea of creating proprietary products insured through Private Mortgage Insurance (“PMI”) and thereby lowering the lending limits needed through the HECM program. That would have been a big mistake then and perhaps an even bigger mistake now.

The HECM program should continue substantially as is until the market can create competitive proprietary reverse mortgage products for a sustained period of time – more than 2 years. No doubt that would mean no substantial changes to the HECM lending limit until at least 2013.

We need more proprietary programs!

We need more proprietary programs!

Martha,

If you are saying that we need these products at any cost, that is literally amazing. As to reliability as an originator, proprietary products have a spotty record.

For example, in the closing days of one proprietary product of one lender, applications were being arbitrarily rejected for any number of reasons. The underwriting for one of mine was delayed for weeks and then was rejected. I responded within hours of notification of the rejection but was told the response was too late. As it turned out the rejection was over an alleged overvaluation based on a desk review. What occurred was the person doing the desk review had used the wrong property address and was valuing a home on a single lot rather than the property under consideration which was a much larger home on a double lot. Several other originators had similar stories about not only this lender but others.

Between mid 2008 and mid February 2009, the number of seniors who applied for reverse mortgages in Southern California nose dived due to the $362,790 HECM lending limit and later the $417,000 lending limit. When the $625,500 lending limit went into effect, things picked up. I would hate to see the lending limit lowered to $417,000 just on the whim that perhaps — just maybe — some lenders might once again be enticed to offer proprietary products. Not long ago there was one lender who was still offering a property product but its principal limit factors, interest rates, and upfront costs were so obnoxious there were few takers.

While I want to see proprietary products return, I hope that will occur despite the current HECM lending limits (as in the case of Generation Mortgage) rather than seeing HECM lending limits lowered just to induce lenders to bring back proprietary reverse mortgages. Seniors with higher valued homes generally have more financial options available to them than those with lower valued homes.

Martha,rnrnIf you are saying that we need these products at any cost, that is literally amazing. As to reliability as an originator, proprietary products have a spotty record. rnrnFor example, in the closing days of one proprietary product of one lender, applications were being arbitrarily rejected for any number of reasons. The underwriting for one of mine was delayed for weeks and then was rejected. I responded within hours of notification of the rejection but was told the response was too late. As it turned out the rejection was over an alleged overvaluation based on a desk review. What occurred was the person doing the desk review had used the wrong property address and was valuing a home on a single lot rather than the property under consideration which was a much larger home on a double lot. Several other originators had similar stories about not only this lender but others.rnrnBetween mid 2008 and mid February 2009, the number of seniors who applied for reverse mortgages in Southern California nose dived due to the $362,790 HECM lending limit and later the $417,000 lending limit. When the $625,500 lending limit went into effect, things picked up. I would hate to see the lending limit lowered to $417,000 just on the whim that perhaps — just maybe — some lenders might once again be enticed to offer proprietary products. Not long ago there was one lender who was still offering a property product but its principal limit factors, interest rates, and upfront costs were so obnoxious there were few takers.rnrnWhile I want to see proprietary products return, I hope that will occur despite the current HECM lending limits (as in the case of Generation Mortgage) rather than seeing HECM lending limits lowered just to induce lenders to bring back proprietary reverse mortgages. Seniors with higher valued homes generally have more financial options available to them than those with lower valued homes. rn