Bank America Suspends Fixed Rate Reverse Mortgage Product in Illinois

image Bank of America announced that it’s suspending the origination of the fixed rate HECM product in Illinois.  According to the company’s statement, they have reviewed its current policies and procedures as they relate to a law unique to the state of Illinois called the Illinois High Risk Home Loan Act (HRHLA). 

HRHLA applies to all closed end loans and requires lenders to compute the ratio of closing costs to loan amount or, in the case of a reverse mortgage, principal limit, in an effort to identify high-cost loans.

For the purposes of the HRHLA, closing costs which exceed 5% of the principal limit are considered high-cost said a statement from Bank of America.  So by nature, a reverse mortgage will eclipse this threshold in most scenarios.

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As far as other lenders, Generation Mortgage told RMD that it has never offered the HECM fixed in Illinois for the same reason Bank of America is suspending the product.  Typically, when a lender the size of Bank of America does something others start to follow suit. 

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  • BOA isn't the brightest financial group around. It seems they would have done their homework before entering the IL market with the reverse product offering. Pull up some more american flags in your yard. DUH!

  • This article/announcement specifically addresses the Fixed Rate product – we don't deal with B of A, but we do work with Financial Freedom, who has followed suit by suspending only their Fixed Rate product.
    Makes no sense – the HRLA does not distinguish between fixed and adjustable rates – are they going to stop ALL reverse mortgages in IL?

  • This article/announcement specifically addresses the Fixed Rate product – we don’t deal with B of A, but we do work with Financial Freedom, who has followed suit by suspending only their Fixed Rate product. rnMakes no sense – the HRLA does not distinguish between fixed and adjustable rates – are they going to stop ALL reverse mortgages in IL?

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