Bank of America (BAC:NYSE) announced it’s paying 100% of the upfront mortgage insurance premium (MIP) on unlocked fixed rate HECMs starting May 7, 2010.
“In an effort to continue to drive additional benefit back to senior borrowers, this latest product enhancement will assist you in providing innovative and cost-effective options to your customers,” said the company in a statement to brokers.
In addition, the product has no servicing fee and pricing for its wholesale reverse mortgage customers remains unchanged. Originators have no restrictions on the HUD allowable origination fee said BofA. “This reduces your exposure to monetary risk due to secondary market fluctuations and allows you further flexibility to adjust the origination fee to remain competitive.”
The decision to credit the entire insurance premium for borrowers and keep pricing the same is the most aggressive move we’ve seen in the past month. As industry volume continues to slide, reverse mortgage lenders feel this could reverse that trend.
“Our whole industry has been held back by an artificial misunderstanding on costs,” said Dave Bancroft, EVP of Security One Lending. “Take away the costs and we will be able to break into a lot of circles that have never been tapped.”