Over the weekend both the New York Time and Wall Street Journal covered how reverse mortgage lenders are lowering costs for consumers. WSJ writer Kelly Green reports that:
Reverse mortgages have long been considered one of the most expensive ways to extract cash from your house. But that is changing as some of the country’s biggest reverse-mortgage lenders are slicing closing costs—helping even some affluent homeowners who want to generate additional income.
Referencing the list of lenders including ￼Genworth Financial Inc.,Bank of America Corp.,Wells Fargo & Co., OneWest Bank’s Financial Freedom and others who have dropped or reduced their origination or servicing fees, or both.
With volume down 22% from Oct. 1, 2009 to March 31, 2010, lenders are lowering costs to help reduce the impact of falling home values and the 10% reduction in the principal limit factors last year says the WSJ.
Made possible by the growth and profitability of Ginnie Mae’s HMBS program, Peter Bell, President of the National Reverse Mortgage Lenders Association said the bonds have become “popular with investors because of their government guarantees and high yields compared with Treasurys.” He added “these bonds also have been more profitable for issuers than selling them to Fannie Mae.”