An interesting article from Investment News titled “Reverse-Mortgage firms aim at wealthy” caught my attention today. The article states that Financial Freedom and BNY Mortgage are targeting these markets specifically. According to James Mahoney, Financial Freedom’s chairman, “[A reverse mortgage] was only perceived as the product of desperation, and now it’s being viewed proactively as a retirement tool by rich people with other alternatives for raising cash”. I agree with Mr. Mahoney but when talking with the majority of financial advisers that deal with high net worth clients they see the fees associated with the loan and have a hard time seeing the benefit outweigh the costs. While we continue to see reverse mortgage lenders lowering costs associated with their jumbo products there is usually a large draw that is required at the time of close. While I understand why the large draw is required, borrowers don’t always like taking out that much cash at the time of close and are usually turned off by the product.
While there are many lenders that are offering jumbo reverse mortgage products I have yet to see any lender really brand themselves as “the premier jumbo reverse mortgage lender”. When I think of a high net worth lender on the forward side of mortgages I always think of Thornburg Mortgage. They do a great job at going after a very specific market and have had great success with it over the years. This will be a great niche market in the reverse world and it will be interesting to see who will really start to go after it.
To read the article from Investment News click the link below