Kiplinger is reporting that a “price war” between reverse mortgage lenders has begun and borrowers are benefiting.
Eric Bachman, founder of Golden Gateway Financial, in San Francisco tells the magazine, “a borrower taking a reverse mortgage on a $500,000 home could see savings of $6,000 to $8,000.”
Reverse mortgage lenders like Generation Mortgage, MetLife Bank, Wells Fargo and others are waiving things like servicing and origination fees to bolster sagging business. From October 1, 2009, to March 31, 2010, business for the entire industry was down 54%, compared with the same time period the year before, says Craig Corn, the vice-president in charge of reverse mortgage operations for MetLife Bank. The real estate slump is one reason. Also, last October, partly as a result of dropping property values, the government cut the amount a homeowner could borrow by 10%.
Last year’s 10% cut “has had a pretty significant impact on the industry,” says Corn. The HECM program’s next budget, which covers the fiscal year starting October 1, may include further restrictions.