The Teachers Federal Credit Union (TFCU) announced that it has partnered with Members Trust Co. to offer reverse mortgages to its customers. The Farmingville, N.Y.-based credit union has over 200,000 members and will offer FHA’s Home Equity Conversion Mortgage and a proprietary reverse mortgage developed by the Tampa, Fla.-based trust company.
TFCU’s new program will include a mortgage origination module, training, underwriting, documentation, servicing, and program development for its Reverse Equity Mortgage (REM).
“With the REM, the consumer will receive the same payment options, the protection of a non recourse loan, annual increase in the principal limit, and same default provisions as with the HECM but without the imposition of insurance premiums,” said Beth Brunner Lee, VP of Reverse Mortgage Center at Members Trust.
“The REM’s principal limit will be less than that of the HECM, but for members who are able to accept a lower principal limit, the REM is an excellent alternative,” said Lee. She estimates that the savings with closing costs for the REM over the HECM will average $10,000.00.
A feasibility study completed by Teachers FCU indicated that improvements could be made in the presentation and marketing of reverse mortgages to senior consumers, said Nancy Orlando, senior vice president of credit at the credit union. “Although TFCU sees the reverse mortgage product as a potential resource for seniors to supplement their retirement income and enhance their quality of life, financial education about the product is imperative,” said Orlando.