We’ve already seen this happen with reverse mortgage products that are based on the CMT. Lenders release HECM products with lower margins to compete and eventually the lower margins start to disappear because of market conditions.
Lender Lead Solutions was the first reverse mortgage lender to come out with a LIBOR product and then we saw Financial Freedom release the product a few days later. Other lenders followed suit and eventually most were offering LIBOR products with different margins ranging from .65-2.00 and things stayed pretty much the same for a few months.
Last month Financial Freedom pulled their LIBOR 65 product due to market conditions which leaves them with LIBOR 75 and 85 products. After this we saw EverBank Reverse release their LIBOR products which offer margins of 1.00-1.50. Are we starting to see a trend of higher margin LIBOR products?
It’s interesting because with today’s LIBOR rates some of the higher margin products have a larger net principal limit than the lower products because of the service set aside fees. Here is a sample Loan Comparison for a 70 year old borrower with a $200,000 home:
I’m curious what LIBOR product most RMD readers are originating? Leave your comments below