Reverse mortgages have hit the mainstream says HeraldNet writer Tom Kelly and with that “comes a variety of combinations and sliding scales.”
He writes that after the “checkered beginnings of reverse mortgages made them a difficult sales proposition to seniors,” all of the chuckholes on the road to reverse mortgage acceptability have been filled.
If you doubt that, Kelly writes “simply check with the investors on Wall Street who are more than willing to pay a premium to buy these assets, creating a secondary mortgage market for the once-orphaned loans with seemingly no home in sight.”
Previously, FHA insured reverse mortgage fees were capped at 2 percent of the home’s value or the county lending limit, whichever was lower. However, with investors from Wall Street becoming more interested in securities backed by HECMs, many of the fees have been eliminated or significantly reduced.
In a nutshell, Wall Street sees reverse mortgages as a more predictable asset class, and the mortgages have finally reached a supply threshold that allows for group discounts to lenders — many of whom pass the savings on to consumers. Sunwest Mortgage Company is among a variety of lenders to announce reductions in fees for servicing, origination, mortgage insurance premiums and title insurance fees.
“The reduced fee options aren’t necessarily going to be available for long,” said Sarah Hulbert, senior vice president and reverse mortgage manager at Seattle Mortgage. “It’s a great time for seniors contemplating a reverse mortgage to begin the process. It’s all a function of how the secondary markets value reverse mortgages. If they begin paying less for the fixed-rate (conversion mortgage), we very well may see some of the fees return.”