Despite reverse mortgage volume being down 40% during the first half of the year, John Lunde, President of Reverse Market Insight tells BankRate that he believes sales are going to pick up when the new HECM Lite product is rolled out.
According to Bankrate:
the FHA is now developing the “HECM Lite,” which would compete with regular home equity lines of credit. The proposed HECM Lite would have no upfront mortgage insurance payment and a 1.25 percent annual insurance payment on the amount of money actually borrowed. Loan limits would be substantially lower than the original HECM plan.
BankRate is reporting that the Federal Housing Administration expects to release the product after Oct. 1st, which has yet to be reported by any FHA official. RMD contacted HUD to confirm and Lemar Wooley, spokesperson for HUD, said “We are working on it, but I’m not aware of any announced a roll-out date.”
When the product is eventually rolled out, Lunde believes it “will appeal to a different — and probably better-heeled — customer who only wants to pull out a little cash now and then and expects to pay it back when his cash flow is a little better.”
Lunde isn’t the only one who believes the new product will help expand the business. RMD recently reported about how some believe the product could expand demographic appeal of reverse mortgages, but others aren’t so sure. Vote in the poll below and let us know whether it will help volume increase.