Seeking Growth, RMF Creates HECM for Purchase Certification Course

Recognizing a lack of traction for the product, Reverse Mortgage Funding has added to the list of ideas for boosting Home Equity Conversion Mortgage for Purchase originations with an in-house course and a new certification title.

The Bloomfield, N.J.-based lender opened up its HECM for Purchase certification classes to wholesale origination partners this week, a move that RMF national sales leader Mark O’Neil hopes will result in more H4P closings for both his company and the industry at large.

“We all recognize that it’s fallen short of its promise,” O’Neil said of H4P, a program that allows homeowners aged 62 and over to use a reverse mortgage when buying a new home. “So we were looking at: Why is it that more originators aren’t embracing this? Why is it that more H4Ps aren’t getting written in this country every year?”


The problem, RMF determined, was the greater number of hangups associated with the more complicated H4P transactions, which O’Neil says he’s seen scuttled at the last minute due to underwriting issues.

“You don’t ever want to blow a purchase deal, especially, and it’s really an area where you need to know what you’re doing,” O’Neil said, adding that the room for error may have turned off originators in the past. “If you don’t know what you’re doing, there are many opportunities along the way to shoot yourself in the foot.”

RMF’s six-module training program seeks to educate originators about those potential opportunities for failure, from marketing issues to precise contract language to the ever-present worries about underwriting. For instance, the program cautions HECM for Purchase originators to ensure that all parties — especially sellers — realize that they may be working on a slightly extended timeframe compared to those associated with private products not backed by the Federal Housing Administration.

“It’s a government program,” O’Neil said. “It’s not a loan that’s going to close in a week or two.”

RMF joins a host of other lenders and partners who have attempted to goose H4P originations: 1st Reverse Mortgage USA of Lakewood, Colo. recently created its own HECM for Purchase team, and appraisal firm Landmark Network, Inc. appointed a construction-focused leader to handle appraisals for new dwellings — including H4P transactions. C2 Financial, the largest mortgage broker in California, also launched a similar training program about reverse mortgages for originators, with one course developed in collaboration with RMF.

RMF has offered its training program to internal retail originators for several months, with a significant amount passing the final exam and earning RMF’s new “HECM for Purchase Certified” designation. That professional credential is valid for two years, O’Neil said, and also allows participants to use a special logo on their business cards and other marketing materials.

RMF’s new credential reflects a secondary goal of the program: making originators feel more confident when working with traditional H4P partners, such as real estate agents and financial planners.

O’Neil declined to provide RMD with any specific H4P volume goals, but emphasized that the company approached the program with a desire to tap into the lost potential of the industry’s “white whale” for all originators, not just those who work with RMF.

“We feel there is a lot more pent-up potential for this program, and we think this is a key step in better preparing our originators to go out there and grow this business,” he said. “We’re just looking to grow the overall industry, and a big part of that is growing the H4P business.”

Written by Alex Spanko

Join the Conversation (7)

see all

This is a professional community. Please use discretion when posting a comment.

  • Why do we need more certifications in this industry? While the issue of confidence cannot be understated at this time, neither does a certification from a lender open NEW doors which is exactly what is needed. After all we are not talking about a bank with clear and established customer recognition in the millions.

    In a year of the current stagnation pattern where we are experiencing an up leg, it is odd that we are seeing a drop in the percentage of H4Ps to total HECMs endorsed year to date as of April 2017 when compared to last fiscal year which was a down leg and the worst fiscal year for total endorsements in over a decade.

    The push for H4P makes no CONSUMER financial sense at all. There is a huge percentage of originators who describe themselves as H4P experts in their titles and ads. So adding the word certified is going to make a difference especially when the issuing party is just one lender?

    We are currently at only 4.6% of all HECMs endorsed through the seven months ended April 2017. Last fiscal year that percentage was 4.8%. Neither percentage is significant to HUD or this industry.

    The argument several originators make in regard to the current origination approach being used today is the horrible percentage that end up being fixed rate HECMs. But why? If the growing line of credit is the key selling point for Traditional and HECM Refinance, why is it not for H4P? Because the H4P originators in this industry find it easier to sell fixed rate HECMs since 1) seniors get full draws (the 60% ruled does not apply to fixed rate H4P originations) and 2) no clear explanation is made of the line of credit to these borrowers since they see hanging onto cash as everything especially if they have just sold their existing homes. Worse, TPOs still make more money with fixed rate H4Ps than they generally do with adjustable rate H4Ps.

    HUD needs to stop this practice by perhaps terminating the fixed rate HECM altogether forever.

    • Wow. Cynic, you are usually ‘right on’ with your comments, but you were certainly wide of the mark above.

      “…the 60% rule does not apply to fixed rate H4P originations”. Of course it does…or by your apparent reasoning one could say it ‘does not apply’ to variable rate H4P originations, either. In both cases the lesser of appraisal or contract price is regarded as a mandatory obligation allowing 100% usage of the principal limit subject to a 2.5% IMIP charge. There is no advantage here for the fixed over the variable rate.

      • REVGUYJIM,

        It seems you are off once again. Mortgagee Letter 2013-33 on page 2 adds three items to the mandatory obligations for HECMs for Purchase. The third item is: “The amount of the Principal that is advanced towards the purchase price of the subject property.”

        Since when has the purchase price or appraised value been regarded as the mandatory obligation? You really do not know this product. Page 3 of Mortgagee Letter 2009-11 states: “The maximum claim amount is used to determine the principal limit and mortgage insurance premium for FHA-insured mortgage transactions. For purchase mortgages only, the maximum claim amount will be the least of: 1) the appraised value; 2) sale price; or 3) FHA mortgage limit for a one family residence.”

        With a fixed rate H4P all proceeds (net principal limit) must be used in the acquisition unless the borrower chooses to permanently lose principal limit. With a variable rate H4P, the borrower can choose how much of the principal limit can be applied. Yes, the 0.5% and 2.5% upfront MIP rates come into play but my comment does not address that since my complaint is about using fixed rate HECMs at all.

        If you do not know the difference between how to compute the principal limit on a H4P transaction and how much of the principal limit can be considered as a mandatory obligation in a H4P transaction, you need help.

        I suggest you seek the help of your supervisor since even in presenting the maximum claim amount (as of all things the mandatory obligation) you forgot about the lending limit amount.

        You do not know H4P at ALL and your reply absolutely shows that.

      • It is hard to argue your points. Part of the industry problem is the lack of knowing how H4P works.

        It is hard to believe that a partial definition of the Maximum Claim Amount for only H4Ps would be used to define one of the key mandatory obligation differences between H4Ps and traditional HECMs.

        REVGUYJIM is not a novice to the industry and should know better. Perhaps he can provide the reason for his response.

      • I believe the argument Cynic is making is that traditional Fixed Rate HECMs often leave 40% on the table. ARMs simply require one to wait.
        Because the H4P allows disbursements up to 100% (of PL), some originators highlight the fixed rate product. The last data I looked at showed H4P loans are 70.5% fixed.
        When H4P clients have the ability to make periodic payments, the ARM product should absolutely be considered.
        If the client has the ability to bring a larger down payment, using only 60% of their PL, the ARM advantages for the client are hard to ignore – lower IMIP (0.5%), more reserve equity (40% of PL), and increased financial security/liquidity after one year because of LOC growth.

  • I see the main problem with the H4P gaining traction is the inability to help the buyer with any concessions. I recently had a referral wherein the people had the cash to buy the home. Looking at the numbers, they would save over $5,000 by doing the cash purchase, then coming to me and immediately refinancing with a ARM HECM. They choose that route.
    Please help me understand why this product has this provision in it. Is there a way to get it changed, even if it takes an act of Congress? Unfortunately, with the low current volume and an absence of knowledge about the product, it does not even get the attention of the National Association of Realtors, which is probably the body we need to join the fight.

string(110) ""

Share your opinion

[wpli_login_link redirect=""]